This report examines Mexico’s energy transition and its associated challenges and opportunities. The energy transition is largely driven by efforts to achieve the climate change mitigation targets outlined in Mexico’s nationally determined contributions under the Paris Agreement, reduce electricity-generation costs, and address the social and environmental inequalities of the current energy system. The authors seek to broaden the scope of the discourse on energy transitions and incorporate social and environmental dimensions in the decision-making process.

The paper urges policymakers to incorporate mechanisms for participation, consultation, and co-design of the policies. The authors criticize the lack of social inclusion in policy reforms so far and provide recommendations for future social inclusion through engagement with local governments. While acknowledging that the energy transition will inevitably result in winners and losers, the authors make a series of policy recommendations to help the Mexican government reach its climate change mitigation goals in a fair way, including by creating socially inclusive spaces to allow participation in the energy sector, especially at the local level.