Mexico faces a difficult set of economic challenges from the fiscal pressure created by low oil prices to the geopolitical uncertainty generated by its northern neighbour. At the same time, as a country with 71% of its economy vulnerable to climate change impacts, Mexico must also deliver its ambitious emission reduction and adaptation plans as well as its clean energy targets.
Despite having implemented major energy sector reforms, financing the country’s Nationally Determined Contribution (NDC) needs a significant additional injection of capital. Barriers to green investment include weakly implemented policies, the lack of a scaled investible project pipeline and lack of project development and financing expertise.
A new and more systemic approach is needed.
We argue that Mexico would benefit from a better coordinated public-private financing strategy with a Green Investment Agency at its centre. Working with Mexico’s existing National Development Banks (NDBs) – many of which are already active in financing green infrastructure – it would form a central repository of project development and financing expertise capable of developing risk mitigation instruments and securing patient capital. In doing so, it will help Mexico scale up and accelerate the delivery of its low carbon transition through unlocking private investment in climate resilient infrastructure whilst lessening the burden on public resources.
