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Carbon dioxide mitigation costs for the Mexican power sector are calculated in order to compare the business as usual (BAU) scenario, based on natural gas capacity growth, to a transition scenario where electricity generation growth using natural gas after 2007 is replaced by renewable energies (solar, wind, hydro and biomass). The mitigation costs are obtained using the following parameters: natural gas price, discount rate and technological progress. The latter is expressed in terms of the anticipated decrease in capital costs, as reported in electricity generation technological literature. Our results show that when technological progress is considered, CO₂ mitigation costs decrease rapidly from 14 $/tCO₂ (in this paper $ express 1997 US dollars and t means metric tons) to zero when the price of natural gas nears 2.68 $/GJ, (for some readers, it can be useful to know that 1.0 US$1997/GJ is 1.19 US$2001 …