The energy transition is a challenge and a necessity for Mexico’s economic transformation as, on the one hand, the country spends 7.6% of its GDP on fossil fuel subsidies and, on the other hand, in 2020 it was estimated that the economic impact of climate disaster increased by 202%. Indeed, to achieve a successful energy transition and secure a sustainable growth path, Mexico needs to modernise its energy sector, reduce reliance on fossil fuels, and ensure sustainability. However, it is necessary to start from the territory, involving communities in the co-construction of resilience and the strengthening of local productive chains. Community and cooperative models play an essential role in promoting the creation of collective businesses managed in a democratic and solidary manner.

An example of just transition opportunities are energy cooperatives. They are a clear and promising model that involves local communities in the production, distribution and consumption of renewable energy, promoting decentralisation and democratisation of energy, especially in those territories historically and systematically excluded.

However, research conducted in Mexico during the first phase of the Research Facility on Inequalities showed low wealth sharing and limited social mobility in the country. In this context, it is necessary to address the just energy transition from an intergenerational social mobility approach and a social perspective to ensure benefits for the whole society. 

This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

This work is also part of AFD's dialogue with the Mexican authorities on options for diversifying the economy and reducing inequalities.

In partnership with the Centro de Estudios Espinosa Yglesias (CEEY) and in collaboration with the National Institute of the Social Economy (INAES), this research project aims to develop a conceptual and analytical research input for a better understanding of the role that renewable energy cooperatives can play in reducing inequality and increasing social mobility, and how they can be financed. 

This input will:

• Conceptualise the just energy transition approach in the area of existing structural inequalities;
• Make a diagnosis from the perspective of intergenerational social mobility, as well as from the perspective of social and solidarity economy, and its relevance in the framework of just transitions, in order to establish identification criteria, social selection and prioritisation of projects;
• Use this diagnostic to propose criteria for the identification and selection of projects that prioritise the populations with the greatest disadvantages of origin (with the least space for social mobility), given the requirement of «no losers» of the just transition;
• Review and articulate technical issues related to decentralised energy and distributed generation, given their importance in the social economy in the just energy transition;
• Review the current INAES projects related to the subject in order, where appropriate, to guide the construction of identification and selection criteria.  

The research team will first conduct an exhaustive review of literature focused on environmental justice, climate justice, social mobility applied to environmental justice and intergenerational environmental justice. The literature will be analysed from the perspective of the energy transition and the intersection of these issues.

Based on this review of literature, researchers will develop a conceptual framework to understand the just energy transition in the field of current structural inequalities. It will also explain how this conceptual framework can be relevant for public policy decision-making.

The research team will also identify information gaps and research needs, with a special focus on the study of just energy transitions.

You will find below the different research papers related to this project:

In progress

Contact: 

• Anda David, research officer at AFD and scientific coordinator of the Facility

Contacto: 

• Anda David, investigadora senior en la AFD y coordinadora científica de la Facilidad 

Trade integration has been very beneficial for Latin America and the Caribbean (LAC) over the past 30 years. However, multiple crisis (the financial crisis of 2008, the Covid-19 pandemic, the climate crisis, etc.) have generated uncertainty about the future of the multilateral trading system. For example, the Covid-19 pandemic highlighted the fragility of certain value chains due to the vulnerability of a system in which factories are located at the other end of the world from where these goods are consumed. All this is leading to reconfigure global value chains, which tend to shorten, becoming less global and more regional – a phenomenon known as the “nearshoring model”. This new context creates an opportunity for LAC countries, and especially for Mexico, which identify themselves as the best alternative for the relocation of value chains under the nearshoring model.

Historically, the Mexican North-Central states have benefited most from the processes of integration into global value chains. This is natural, since it is where the manufacturing export base is located due to its proximity to the United States. On the other hand, the South-South-East of the country presents historical lags that make it significantly difficult to integrate it into global value chains and, therefore, to take advantage of change in the current international context.

In this regard, it is imperative to design strategies to take advantage of the opportunity presented by the nearshoring phenomenon, taking into account the particular problems of each region. This two-speed strategy is essential to define public policy interventions that can achieve more equitable regional development.

This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

This research project complements the work carried out by the Extension of the Research Facility on Inequalities in Mexico on the national care system and on the redistributive impact of environmental policies.

This project aims to deepen the study of the phenomenon of relocation of global value chains to Mexico, recognising the challenges and opportunities it generates:

• First specific objective: To present a proposal to overcome one of the most critical bottlenecks identified by the productive sector, which is electricity generation. It is suggested to close the investment gap in electricity in the short term, through investment in distributed generation with solar panels, as well as exploring sustainable and equitable options, with a particular focus on the State of Nuevo León (North of the country).
• Second specific objective: To identify economic sectors with potential to benefit from the phenomenon of relocation of value chains and to address existing gaps in the formation of talent and human capital, emphasising social inclusion and gender equity. This will include a detailed analysis for the states of Oaxaca and Veracruz (South of the country), aiming to develop skills in emerging and traditional sectors, and prepare the workforce to take advantage of opportunities in the medium and long term.
• Third specific objective: To develop a strategic plan for the implementation of a portfolio of solutions based on the recommendations identified in the first and second specific objectives.

• First specific objective: Scenario analysis will be used to measure the gap between demand and capacity for electricity generation. Solar distributed generation capacity scenarios will use Geographic Information Systems spatial analysis tools, while the estimates on the redirection of subsidies will be taken from official public sources.
• Second specific objective: Generated using a combination of international and national databases, economic metrics will serve to identify opportunities to boost productive diversification. A preliminary analysis will suggest industry clusters to prioritize. This will allow to select economic sectors with the potential to trigger industrial development, through interventions in the field of talent training. Talent gaps will then be identified through quantitative analysis. This cabinet analysis will be complemented with qualitative information (interviews, focus groups with key actors…). 
• Third specific objective: The strategic plan will follow a mission-oriented policy approach, including a detailed action plan to be presented to the Mexican Federal Government. The plan will consist of a map of possible executing units within the federal, state and/or municipal governments, an analysis of the regulatory and institutional constraints that the plan could face, as well as strategic alternatives to overcome them.

You will find below the different research papers related to this project:

In progress

Contact: 

• Anda David, research officer at AFD and scientific coordinator of the Facility

Contacto: 

• Anda David, investigadora senior en la AFD y coordinadora científica de la Facilidad 

As recent figures indicate, inequality and poverty in Colombia have increased in recent years, especially after the Covid-19 pandemic. The deterioration of these indicators places Colombia among the most unequal countries in the world. The Multidimensional Diagnostic on Inequalities in Colombia also demonstrates that gender gaps are particularly prevalent in the country. Indeed, employment rates are lower for women than for men at all levels of education. For example, in 2020, while the employment rate of women without any level of education reached 31%, for men it was 65%. 

In this context, the Colombian government is committed to reduce the gaps between population groups and between territories and has identified closing gender gaps as one of its priorities. Given this situation, it is critical to delve into the understanding of the causes and solutions to inequality, and identify ways through which inequality can be reduced through public policies, social spending and fiscal policy. 

In order to support the Colombian government in the development of public policies aimed at reducing inequalities, the Extension of the EU-AFD Research Facility on Inequalities, in close collaboration with local research centres and local authorities, has already:

• Elaborated the Multidimensional Diagnostic on inequalities and generated statistics on inequalities with the National Administrative Department of Statistics (DANE). The diagnostic is a statistical overview of inequalities from multiple angles that seeks to support public policy decisions by providing key information for the reduction of the most important gaps in the country. 
• Implemented a fiscal incidence analysis through the methodology of the Commitment to Equity (CEQ), and, in close collaboration with the Ministry of Finances, elaborated a tool, which enables to assess the impact on inequalities of the latest tax reform in the country, through micro-simulations. 

These two studies opened the door to new possibilities of analysis that provide data, information and relevant knowledge for the Colombian Government as an input to strengthen the design, implementation and monitoring of policy instruments that can reduce the inequality and gaps between population groups, especially those of fiscal policy and social spending.

This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

This research project will use innovative methodologies to take advantage of the information derived from the merging of surveys, databases and administrative records to strengthen the understanding of the impacts of the fiscal and spending measures of the Colombian government on closing gender gaps, and more generally, to strengthen the analysis of income inequality measures in Colombia.

This study also aims to generate an in-house capacity allowing the Government of Colombia to continue reporting and analysing new inequality metrics that inform the design of more equitable public policies in the country.

The research project will:

• Develop a methodology for the analysis of the impacts of fiscal and government spending measures on closing gender gaps and income inequality in Colombia, based on the CEQ tool;
• Determine the necessary methodological and operational components that will be updated on a recurring basis by different actors involved in public policy decision-making;
• Estimate a battery of indicators of the impact of fiscal, tax and social spending policy on gender gaps.

The analysis will use surveys, databases of supply and demand of social programs, as well as administrative records and tax information of natural persons, integrating them into a CEQ model. These data will serve as a basis for the inclusion of the gender approach and for the analyses that will be carried out as part of this research.

Throughout the research, working groups will be organised with the National Planning Department, the National Administrative Department of Statistics, the National Tax and Customs Directorate and other stakeholders who can contribute to the conceptual and methodological development of the research, the analysis of the results and the application of the tool to policy processes.

You will find below the different research papers related to this project:

In progress

Contact: 

• Anda David, research officer at AFD and scientific coordinator of the Facility

Contacto: 

• Anda David, investigadora senior en la AFD y coordinadora científica de la Facilidad