Air pollution is a serious threat to the health and economic development of Latin America, where over 100 million people breathe dangerously polluted air. More than 14,700 deaths were caused by air pollution in 2010 in Mexico alone. In fact, Mexican government pledged to reduce CO2 emissions by 30% by 2020. To reach this goal, the Mexican government has several options, including: 1) a straight carbon tax, to remain in force; 2) a carbon tax evolving to a market-based cap-and-trade system; or 3) a carbon tax evolving to a market-based system, with resultant revenues dedicated to supporting clean energy initiatives. The argument is made that EU countries and others have shown that a carbon tax can work, with certain safeguards in place, but it should transition to a market-based system over time, as this is favored by industry. In addition, to support long-term clean air goals and showcase ongoing successes, revenues should be used to support the development of renewable energy (RE), which can enroll citizens as stakeholders.

Option 3 has the potential of supporting emissions reduction goals, generating economic investment and jobs, and improving the population’s health. Mexico has announced firm initiatives in this direction. Other Latin countries are making progress: Brazil has expanded clean energy to 15% percent of its total, Chile plans to increase RE to 20% by 2020, and Uruguay is inviting solar and wind projects. But no other Latin countries appear to have a plan as comprehensive as that of Mexico. Its leadership and example could thus serve as a model for Latin America, if its government follows up on its promises.