We are excited to add a new compliance scheme to our VCM/Compliance Tracker, being the Querétaro Carbon Tax scheme! This takes our list up to 9, with more schemes to be added soon…
In 2014, Mexico became the first Latin American country to implement a carbon pricing scheme with its carbon tax. Since then, seven provincial states in Mexico have implemented carbon taxes within their jurisdictions.
Currently, Querétaro is the only state to allow carbon offsets for use against its carbon tax, which covers almost 7 million greenhouse gas emissions. In fact companies can use VCM credits to meet up to 20% of their taxable emissions. As of January 2024, 346 100 tons of carbon offsets have been used against the state's carbon tax. For more information, visit the federal government’s General Law on Ecological Balance here.
From February 1, 2024, Querétaro has set a daily amount of CO2 emissions allowed per unit (a daily UMA) of 5.6 UMA per tCO2e emitted, which is valued at 108.57 Mexican pesos ($6.5/t). When corporations fail to pay the carbon tax, they are subject to a late payment fee rate (1.47%), which can be found on the federal government’s website here.
The main institutions managing the Querétaro’s carbon tax are: the Finance Secretariat of the Querétaro State Government (responsible for administrative collection) and the Secretariat of Sustainable Development of the State of Querétaro (SEDESU) (responsible for environmental regulation compliance, surveillance, and integrity of emission inventories).
Eligible offsets must be vintage 2020 onwards, and eligible projects must be certified under SEDUSU approved standards (CAR, VCS, GSR, CDM, BioCarbon Registry, CERCARBONO), and fulfil one of the eligible project types: photovoltaic solar energy, energy efficiency, waste management, sustainable livestock, and forestry projects.
Querétaro-eligible project locations by issued credits (Source: AlliedOffsets)
This market is currently very nascent, as we’ve located 29 Cercarbono and Climate Action Reserve projects issuing and retiring 14.9 million and 2.34 million carbon credits respectively.
Out of the 14.9 million issuances, 2.3 million have been vintage 2020, 4.7 million have been vintage 2021, 5.1 million have been vintage 2022 and 2.7 million have been vintage 2023.
Source: AlliedOffsets
There are about 12.5 million credits currently in the market which would be eligible for this scheme, with the majority of credits with a 2021 or 2022 vintage.
Net available credits in the market overtime (AlliedOffsets)
Despite being a very new market, we’ve located 113 distinct buyers of eligible credits, peaking at 79 distinct buyers in 2023, and we’ve already seen 30 new buyers enter the market this year.
About 1.3 million credits have been retired in the last 12 months, with top buyers including Etsy, Lenovo, Bank of Montreal, Citadel and Samsara among others. We’ve observed main buyers of these credits to be Technology and Telecommunications companies (22.84%), Industrials (19.45%) and Financial Services (12.69%), with energy and aviation only representing up 6.51% and 4.79% respectively.
We’ve located 17 brokers of Querétaro eligible credits, with ClimeCo, Watershed, Aspiration Partners, Inc., CarbonBetter and Cool Effect topping the charts by credits retired.
Querétaro eligible credit brokers by retirements (Source: AlliedOffsets)
Chemical Processes and Industrial Manufacturing credits with a 2021 or 2022 vintage are normally around $3.55 per ton, while vintage 2023 credits are around $5.93 per ton. Forestry and Land Use projects trend for higher prices, ranging between $17 - $19 per ton.
CAR1480 located in Florida tops the table of all-time issuances and retirements with 9.2 million and 2.23 million credits respectively (with est. annual emission reductions of 9.2 tCO2e). It also scores the highest on our liquidity index, which we released last year to deliver deeper market insights. CAR1660 and CAR1608 come second and third, followed by CAR1608 and CAR1607.
We expect to add new schemes and deliver deeper insights into the evolution of voluntary and compliance markets in the coming months. Is there a scheme or a policy you would like us to explore? Please share it in the comments below, or get in touch with us!