In the early 2010s, Mexico was a regional leader in renewable energy but President Andrés Manuel López Obrador (“AMLO”), who took office in 2018, has reversed this trend. His administration has made massive investments into the state-owned oil company Pemex which amount to USD 9 billion and passed legislation that favours the energy grid taking power from state-run plants fuelled by crude oil and coal.
The government’s devotion to fossil fuels became evident last 13 July when it announced that the state-owned Federal Electricity Commission (“CFE”) will buy two million metric tonnes of coal from Mexican producers for its plants. In July 2021 until December 2021, the CFE will acquire coal from producers in the northern state of Coahuila to help the regional industry.
A Mexican energy consultant commented, “It is not a surprise that Mexico is not going to comply with the Paris Agreement but some progress has been made. The government plans to increase the proportion of coal in Mexico’s energy mix but you have to remember that the amount of coal used had fallen by half recently.”
“It is not a surprise that Mexico is not going to comply with the Paris Agreement but some progress has been made.”
Energy consultant, Mexico
López Obrador’s coal-centred strategy is rooted in a nostalgic view of energy sovereignty even if coal-fired plants provide only 9.6% of Mexico’s electricity. Moreover, coal consumption in Mexico decreased by 34% between July 2019 and July 2020 and it is only the fourth largest source of energy production in the country, accounting for 5.2% of the total production in 2020, when in 2019 it reached 8.9%.
An energy executive had other concerns, “The big issue is the state of the plants that require imminent modernisation, the coal plants should not be operating but AMLO will continue to insist on their use, especially with the influence of Senator Guadinana and the importance of the industry for the state of Coahuila.”
In parallel with the promotion of renewable energies, Latin America continues to back fossil fuels and countries like Brazil, Argentina and Peru use coal as part of their electricity mix, even if it is a small share of its total electricity production. The continued use of fossil fuels has its base in the lack of a long-term energy policy agenda, a weakness in limiting the power of large companies exploiting these sources in the region and a misconception of the revenues generated by fossil fuels.
“International pressure is the best option for Mexico to turn around and resume the path of renewables, [but] I don’t think this will happen on the short-term.”
Energy executive, Mexico
The energy executive believed that change would only be made with increasing international pressure, “It seems to me that international pressure is the best option for Mexico to turn around and resume the path of renewables, especially from the United States, through the application of trade agreements and economic sanctions. However, I don’t think this will happen in the short term.”