Latin America is still the Wild West of carbon taxes and offsets

Why some companies target mangroves as the solution

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Mangroves in Los Rapidos Bacalar, Mexico. Photo: Michael Molinski.

(Michael Molinski is a senior economist at Trendline Economics. He’s worked for Fidelity, Charles Schwab and Wells Fargo, and previously as a foreign correspondent and editor for Bloomberg News and MarketWatch.) 

YUCATAN, Mexico (Callaway Climate Insights) — To date, Mexico is the only Latin American country with a federal emissions trading system where companies and communities can buy and sell carbon offsets, which can then be used to reduce a company’s carbon taxes and to improve its ESG ratings.

“Mexico has both a carbon tax and an emissions trading system (ETS) in operation, whereas Chile has a carbon tax that includes offsets,” writes Taylor Pullins, a Houston-based partner at the law firm White & Case. “Colombia and Argentina both have carbon taxes, and Colombia and Brazil are developing ETS.”

But the rest of Latin America not only has no emissions exchanges nor carbon taxes.