Abstract
In the last three decades, the high growth of natural gas as an energy source for Mexican electricity production was the most significant change in the sector. Natural gas went from being the source of 7% of electricity in 1990 to 62.3% in 2020. A co-dependence of electricity and natural gas systems has been established and is increasing. Is this fact consistent with the objective of decarbonizing the electricity sector? We study this question through a decomposition analysis of electricity Greenhouse Gas (GHG) emissions in Mexico between 1990 and 2015. We use a Logarithmic Mean Divisia Index (LMDI) to quantify the changes of electricity GHG emissions related to activity, carbon coefficient, structure, and energy intensity effects. Activity effect was the most significant driver of GHG emissions growth, structure and energy intensity effects contributed to limiting that growth, while the carbon coefficient effect had a small contribution to mitigating GHG emissions. From these results, we raise concerns about the role of natural gas, which crowd-out renewable energy and could lead to carbon lock-in and stranded assets in the long term. In addition, Mexico's energy system relies heavily on U.S. natural gas. In light of these concerns, we concluded that an energy policy aiming towards a low-carbon energy system should consider the composition “natural gas + renewable energies + energy efficiency”.
