Decarbonization and non-cooperating strategies: A case for Mexico

Countries with a low share of global emissions may perceive their cooperation in decarbonization as less critical yet economically burdensome . While non-cooperating countries may benefit from reduced global emissions at lower direct costs, they can also face significant environmental consequences . This paper investigates an asymmetric scenario in which most countries engage in decarbonization efforts while a single country adopts a free-riding strategy, focusing on Mexico as a case study. Our study provides insights into investment needs compared to environmental implications for a country with a free-riding strategy. The investment needs under free-riding tend to be higher than a baseline scenario with globally low mitigation, and the environmental impacts significantly higher than initially considered . At the same time, the additional investment required in a globally coordinated decarbonization scenario may be smaller than expected: our results for Mexico show a Below 2C scenario requiring 20% more investment than the baseline, but only 11% more than the asymmetric scenario. These findings highlight the complex trade-offs faced by non-cooperating countries and emphasize the need to account for both economic and environmental dimensions along with global interactions when developing climate policy strategies. • Free-riding on decarbonization can have important unanticipated downsides. • Ignoring global climate policies can bias a country’s assessment of environmental risk and investment needs. • The investment needs for energy-supply decarbonization in Mexico could be similar to a free-riding scenario in early decades.