This paper analyzes the economic,distributional, and environmental impact that energy subsidyreductions and alternative compensating mechanisms mighthave in Mexico. To achieve that goal, author use acomputable general equilibrium model of the Mexican economy.They make several important changes to the original model tobuild the energy subsidies (to gasoline, diesel, electricityand liquefied petroleum gas) into the benchmark and then doan array of simulations to see the effects of removing suchsubsidies. The report results for 2012, which is the initialyear; 2018, which will be the end of the nextadministration; and 2024 and 2030, which represent themedium and long term, respectively. When doing thesimulations, author look at possible compensation mechanismsand analyze the impact on the income groups that may beaffected by the reduction of energy subsidies.