PUBLICATION OF REFORMS TO THE GENERAL LAW ON CLIMATE CHANGE RESULTING FROM THE COMMITMENTS ACQUIRED BY MEXICO DURING THE TWENTY FIRST CONFERENCE OF THE PARTIES OF THE UNFCCC.

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PUBLICATION OF REFORMS TO THE GENERAL LAW ON CLIMATE CHANGE RESULTING FROM THE COMMITMENTS ACQUIRED BY MEXICO DURING THE TWENTY FIRST CONFERENCE OF THE PARTIES OF THE UNFCCC.

Last 13 July 2018, the Decree by means of which reforms and additions to various dispositions of the General Law on Climate Change ("Reforms to the GLCC") was published, same that entered into force on 14 July 2018,

The objectives of the Reforms to the GLCC are:

1. Establish an emissions commerce system ("ECS") to be implemented progressively and gradually, same that will promote the reduction of the emissions generated by Mexico with the least possible costs and in a measurable, reportable and verifiable manner.

The participants of the ECS will be able to carry out operations and transactions linked with the emission commerce of other countries or operations and transactions that can be utilised in international carbon markets.

Prior to the implementation of the ECS, the preliminary basis for a trial period with no economic effects for the participants shall be established, same that will be in force for 36 months. Said basis, and any other disposition necessary for the setting up of the ECS, shall be published no later than 10 months following the publication of the Reforms to the GLCC, that is, no later than 16 May 2019.

2. Carry out the adjustments or modifications to the sceneries, trajectories, actions and/or goals committed within the National Strategy on Climate Change.

The National Commission on Climate Change shall propose the pertinent changes to the National Strategy on Climate Change in order to comply with the commitments made by Mexico in the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).

3. Setting forth the reduction goals assumed as National Determined Contributions.

As per the Twenty First Conference of the Parties to the UNFCCC, Mexico made the commitment to reduce, by 2030 and in a non-conditional way, its greenhouse gas emissions in a 22% and its black carbon emissions in a 51% with regards to the baseline. This commitment will imply a 40% reduction in the intensity of emissions per GDP unit between 2013 and 2030.

The 22% reduction on greenhouse gas emissions translates itself in the following commitments per participating sector:

• Transport: 18%
• Electric generation: 31%
• Residential and commercial: 18%
• Petroleum and gas: 14%
• Industry: 5%
• Agriculture and farming: 8%
• Wastes: 28%

The commitments referred to in the first paragraph of this section may be increased up onto 36% and 70%, respectively and conditionally, if a global agreement foreseeing the following topics were to be adopted:

• An international carbon price.
• Adjustments to tariffs for carbon content.
• Technical cooperation within the international community.
• Access to low cost financial resources.
• Technology transfer.

4. Setting the basis for the elaboration of the National Adaption Policy within the frame of the National System for Climate Change and an Early Warning System.

Finally, the Reforms to the GLCC set forth that the Federation, the States and the Municipalities shall prepare a national policy for climate change adaptation in which measures are to be foreseen same that shall be implemented in the medium and long-term. Also, the creation of an early warning system is foreseen to warn the population in an expedite manner of their vulnerability and risk situation before extreme hydrometeorological phenomenon related to climate change (hurricanes, unusual rains, heatwaves, etc.).

SINCERELY,

Mexico City, July 18th, 2018