Net-Zero Cities: Policies and Lessons for Mexico

Cities are at the forefront of the climate crisis, accounting for over 70% of global carbon dioxide emissions. However, they also function as hubs for innovative and effective climate solutions currently being implemented. The concept of a “net-zero city,” which aims to balance emitted carbon with reductions or removals, is now shaping the design of urban energy systems, transportation, buildings, and infrastructure worldwide. This article examines global efforts toward net-zero cities, particularly what Mexico can learn from these initiatives and the challenges in achieving sustainable urban environments.

As nations strive for carbon neutrality, cities are becoming experimental grounds for developing policies, business strategies, and technologies that can be adopted nationally. The global context offers valuable insights into urban decarbonization strategies and highlights Mexico's role in this crucial transition.

Decarbonizing Cities: What the Best Are Doing Differently

Cities worldwide are launching ambitious efforts to reduce carbon emissions, supported by strong national policies, practical local actions, and partnerships with the private sector. 

Copenhagen aims to be the first capital city to achieve carbon neutrality by 2025. The city is implementing carbon pricing, utilizes renewable energy sources, and invests significantly in areas like heating and transportation to reach this goal. The Danish Energy Agency backs these efforts by collaborating closely with local authorities and providing financial assistance and technical support for community energy projects.

Similarly, Amsterdam has vowed to eliminate all fossil-fuel-powered vehicles from its central area by 2030. The city is also establishing no-emission logistics zones and upgrading public buildings. National carbon taxes and local incentives and regulations bolster these initiatives to enhance building performance.  

Private companies play a crucial role in the success of these sustainable energy efforts. Ørsted, once a fossil fuel company in Denmark, now produces over 50% of Copenhagen’s electricity from offshore wind. In Amsterdam, Edge Technologies developed Edge Olympic, which is recognized as one of the world's most advanced and sustainable office buildings, complete with solar energy systems and real-time energy monitoring.  

Both cities share a common vision and framework, emphasizing integrated governance across sectors, accessible financing, and a stable regulatory environment encouraging active involvement from businesses and citizens.

Connecting Vision With Reality

Mexico had established itself as a leader among Latin American nations in the realm of national climate legislation. The General Law on Climate Change, enacted in 2012, set forth clear and ambitious long-term goals for emissions reduction, mandating that by 2024, a substantial 35% of electricity generation must derive from clean sources. However, the execution of these bold plans has been uneven, particularly at the municipal level. The Sheinbaum administration has doubled down on these climate goals and is promoting policies that favor the development of renewable energy.

Moreover, Mexico’s national carbon tax, introduced in 2014, has critical shortcomings. Importantly, it does not encompass essential fuels such as natural gas and is set at a low rate of around US$3 per ton, which is wholly inadequate to drive meaningful change in high-emission sectors like transportation and construction.

At the subnational level, a 2023 report from the World Bank revealed that many local governments are significantly lacking in the technical expertise and financial resources essential for effectively implementing federal climate initiatives. Furthermore, urban infrastructure and regulatory frameworks often remain outdated or poorly aligned with national objectives, causing considerable disparities between the robust policies established and their actual execution on the ground. 

Yet, amid these challenges, there are noteworthy and promising developments. Many state governments have taken accountability and launched state energy agencies to develop and coordinate policies to promote the adoption of renewables in the state. Queretaro, for example, has fully deployed its carbon tax, priced at rates equivalent to California and Quebec. In Nuevo Leon, a groundbreaking circular economy initiative launched in 2024 aims to bolster biodiversity, enhance carbon storage, and generate water credits, all while creating jobs in rural areas and establishing a certification program for solar installers. At Solfium, we’re also collaborating closely with the states of Jalisco, Yucatan, Oaxaca and Michoacan to support them in deploying policies and incentives to accelerate the adoption of distributed solar energy.

Furthermore, citizen engagement is on the rise. Sales of electric and hybrid vehicles skyrocketed by 70.2% in 2024, exceeding 108,000 units sold between January and November. While this transition is still emerging, it clearly signals a growing demand for cleaner alternatives, especially in urban centers. 

Lessons Learned and Potential Applications 

Mexico has significant strengths when it comes to clean energy: high solar irradiance, a young and tech-savvy population, and a vibrant ecosystem of startups and small to medium-sized enterprises (SMEs) eager to contribute. However, institutional complexity and uneven governance are major hurdles that limit what cities can achieve on their own.

 According to IRENA, in 2023, solar energy could account for more than 30% of Mexico’s energy mix, given the current technical potential. Yet, only 11% of climate finance reaches urban projects in Mexico, even though cities are home to over 80% of the population. So, what needs to change?

1. Policy Alignment: Municipalities need more than just mandates. They require the right regulatory tools, financing options, and trained personnel to effectively carry out local climate initiatives.

2. Local Capacity-Building: We must scale up programs that certify solar technicians, building auditors, and EV service professionals. This will enhance the bankability of projects and build public trust.

3. Financing Mechanisms: It's crucial for Mexico to explore blended finance, subnational climate funds, and direct investment in distributed energy systems, particularly rooftop solar and microgrids that serve urban outskirts.

4. Data and Metrics: National and local governments need standardized emissions tracking and project evaluation tools. This will allow them to prioritize investment in the areas that need it most.

 Cities can draw inspiration from Copenhagen or Amsterdam, but will need to create their own versions of net zero, designed to fit the specific social, economic, and geographic contexts that define their urban life. Net-zero cities are not merely marketing gimmicks. They represent a crucial structural response to the pressing climate, energy, and development challenges that are already influencing urban growth. In Mexico, the foundational elements can be further developed to act as strong pillars of this shift. It is imperative to have strong coordination among government levels, across various sectors, and with the active involvement of citizens who will be the driving force behind this transition.