Climate Finance in Mexico
By Douglas Alencar (UFPA/CFC-GS) and Andressa Lima (UFPA/CFC-GS) Between 2014 and 2023, Mexico received significant volumes of climate finance, essential to driving mitigation, adaptation, and integrated projects in response to the challenges posed by climate change. These resources, originating from different financial instruments and showing considerable annual variation, reflect both the opportunities and the limitations in accessing capital for environmental policies. An analysis of their evolution over the period reveals not only the predominance of investments focused on mitigation but also the strong reliance on loans as the main financing mechanism, raising questions about fiscal sustainability and the need to expand non-repayable funding sources to strengthen the country’s climate resilience. Compiled by the author based on OECD CRS – Climate‑related Development Finance. Available in the CFC‑GS Climate Finance Tracker. The graph above shows the total climate finance received by Mexico between 2014 and 2023, in billions of constant 2023 US dollars. The volume of resources fluctuated considerably over the period, with a notable peak in 2017, when the country received approximately USD 2.23 billion — the highest value in the series. After this peak, funding declined in 2018 (USD 1.58 billion) and continued to oscillate in subsequent years. In 2021, there was another significant increase, reaching USD 1.62 billion, followed by a drop in 2022 to USD 0.88 billion and a partial recovery in 2023, with USD 1.13 billion. The lowest value was recorded in 2014, at USD 0.62 billion, while the overall trend indicates high volatility in the annual flow of climate finance to the country. Compiled by the author based on OECD CRS – Climate‑related Development Finance. Available in the CFC‑GS Climate Finance Tracker. The graph above shows the total climate finance received by Mexico between 2014 and 2023, in billions of constant 2023 US dollars. The volume of resources fluctuated considerably over the period, with a notable peak in 2017, when the country received approximately USD 2.23 billion — the highest value in the series. After this peak, funding declined in 2018 (USD 1.58 billion) and continued to oscillate in subsequent years. In 2021, there was another significant increase, reaching USD 1.62 billion, followed by a drop in 2022 to USD 0.88 billion and a partial recovery in 2023, with USD 1.13 billion. The lowest value was recorded in 2014, at USD 0.62 billion, while the overall trend indicates high volatility in the annual flow of climate finance to the country. Compiled by the author based on OECD CRS – Climate‑related Development Finance. Available in the CFC‑GS Climate Finance Tracker. The graph above shows the climate finance received by Mexico between 2014 and 2023, broken down by type of financial instrument: loans, grants, and equity. Loans overwhelmingly dominated the flow of resources throughout the entire period, accounting for between 85% and 96% of the annual total, with notable peaks in 2017, when they reached USD 2.11 billion (95% of the total), and in 2018, with USD 1.52 billion (94%). Grants played a modest role, ranging from 4% to 13%, with their highest values recorded in 2022 (USD 112.5 million) and 2023 (USD 128.8 million). Equity investments, representing capital injections, were negligible, appearing in only a few years and always below 1% of the total, such as in 2015 and 2016. These figures indicate that climate finance for Mexico has been predominantly structured as debt, raising concerns about long-term financial sustainability and repayment capacity. A combined analysis of the three graphs reveals that climate finance received by Mexico between 2014 and 2023 displayed strong volatility, with significant peaks in 2017 and 2021, and a predominance of resources allocated to mitigation, although adaptation and integrated projects gained relevance in certain years. The profile of financial instruments shows that most of this funding has been provided in the form of loans, with a reduced share of grants and an almost negligible level of equity investments, indicating a dependence on debt mechanisms to implement climate actions. Despite the importance of climate finance for developing countries like Mexico, developed countries have yet to fully meet their donation commitments established in international agreements, such as the annual target of mobilizing USD 100 billion for climate support. The shortfall in non-repayable resources limits the ability to implement projects with major social and environmental impact, particularly in adaptation, which is crucial for protecting vulnerable communities. Expanding and delivering contributions in the form of grants is essential to reduce reliance on loans, ease fiscal pressures, and accelerate the transition to a low-carbon economy, contributing in a fairer and more effective way to the global fight against climate change.
