Biomethane for electricity in Mexico: A prospective economic analysis

Hernán Bejarano, Pedro Hancevic y Héctor Núñez, Profesores Investigadores Titulares de la División de Economía del CIDE, escribieron el artículo Biomethane for electricity in Mexico: A prospective economic analysis en la revista Economics of Energy & Environmental Policy.




Mexico has important clean energy goals for the next ten years. While the previous administration promoted a competitive electricity market and ambitious environmental goals, the current administration has targeted higher revenues from the national power company. Second- generation biomethane, however, can meet both of these objectives because it substitutes imported natural gas, so it does not compete with the domestic electricity supply, and it helps to meet environ- mental goals. This paper develops an economic framework to provide insight into the economic and environmental effects of policy alternatives promoting the biomethane industry. Results show that maintaining the status quo policy will prioritize electricity company revenues and biomethane production will not occur, while a first-best policy will promote this industry more and yield the highest social welfare.



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