MEXICO CITY — On a recent scorching afternoon in his home state of Tabasco, the Mexican president celebrated his government’s latest victory. new refinery.
Although not yet operational, President Andrés Manuel López Obrador has hailed the refinery as the centerpiece of his grand campaign to secure Mexico’s energy independence.
“We ignored the siren song, perhaps a voice that honestly predicted the end of the oil age and the massive arrival of electric vehicles and renewable energy,” he told the cheering crowd.
At a moment when scientists are sounding the alarm about the need to move away from fossil fuels that contribute to catastrophic climate change, Russia’s invasion of Ukraine will trigger a global shift in the opposite direction, pushing the United States and European nations toward oil and moved to increase oil production. Gas production to counter Russian energy bans.
But Mexico goes further.
Driven by López Obrador’s long-held goal of wresting control of the energy sector from private companies and allowing state-owned companies to dominate the market, the government has undermined efforts to expand renewable power. and bet the future of the country on fossil fuels.
The policy seeks to reverse what Lopez Obrador sees as corrupt privatization of the industry, guarantee Mexico’s energy sovereignty and return the country to the glory days when oil created thousands of jobs and underpinned the economy. center of ambition.
To this end, Mexican authorities have used the power of regulators to shut renewable energy companies out of the market and prevent power plants from operating, instead supporting fossil fuel power plants owned or operated by the state. Dozens of former senior government officials, analysts and energy executives, according to interviews with
As a result, analysts say, Mexico will almost certainly fall short of its pledge to the world to cut its carbon footprint. The country also has the potential to jeopardize billions of dollars in renewable investments, creating another source of tension with the Biden administration, which has made combating climate change a major pillar of its foreign policy. .
“People say, ‘How is he going to deliver on his commitments to climate change?’ “He is an oilman,” he said.
The president’s public affairs office, Mexico’s energy ministry and the state power company did not respond to requests for comment.
Lopez Obrador argues that while the transition to renewable energy will come eventually, Mexico is not ready yet.
“That technological advance will become a reality,” he said at the refinery’s opening ceremony. “We need more time to get there.”
The government has not completely abandoned renewable energy. The company plans to spend about $1.6 billion to build a giant solar plant in northern Mexico and upgrade a dozen state-owned hydroelectric plants.
According to government statistics, Mexico produces about 70% of its energy from fossil fuels, with the rest coming from renewables, nuclear and other low-emission sources.
López Obrador’s supporters also argue that the government’s strategy will give the country more control over the energy sector and the transition to renewable energy. The policy is crucial in a country where public oversight of the private sector is weak, said Fulvio Luis Alarcon, an analyst and former adviser to state oil company Pemex.
“When a sector as important as energy in our country becomes controlled by the private sector, it becomes very difficult to regulate the country,” Lewis said. Putting the sector under state control “allows us to manage the energy transition at our own pace.”
For Mexico, sovereignty over energy production occupies a special place. President Lazaro Cardenas in the 1930s seize the assets of foreign oil companies, A symbolic event celebrated as a national holiday, including a US company accused of exploiting Mexican workers and nationalizing the industry.
López Obrador, who hails Cardenas as an inspiration, has made returning the nation’s energy back to a near monopoly a top priority.
One of his first acts was to appoint Loyalists to the board of the Energy Regulatory Commission, which is responsible for overseeing the electricity sector, transforming what was once an independent body into a tool for carrying out the president’s agenda. , analysts say.
Jeremy M. Martin, Vice President of Energy and Sustainability at the American Institute, a public policy research institute, said:
Government records show that as of June, more than 50 wind and solar projects proposed by private and foreign companies were awaiting approval from the commission, with some applications dating back to 2019 and private New permits for energy companies have finally been approved. Together, they represent about 7,000 megawatts of renewable energy potential. This is enough power to power a city. The size of Los Angeles.
Francisco Salazar Diez de Sollano, former chairman of the Energy Regulatory Commission, said there was “a war being waged against renewable energy”.
Antonio Perea, a business developer at Sungrow, a Chinese company that supplies solar hardware, said three projects his company was working on have been put on hold because the government has not granted permits.
In Mexico, “we had the cheapest solar energy in the world, but unfortunately we’ve been left behind by all these changes,” Perea said, referring to the government’s energy plans. “This is not an energy issue, it’s a political issue.”
Lopez Obrador is also committed to rolling back the sweeping energy reforms approved by his predecessor. The reform has opened up Mexico’s energy market to private companies, including foreign companies working on renewable energy, for the first time in decades. In 2019 he canceled public auction For the rights to wind and solar power, even though previous auctions had led to the lowest renewable energy prices in the world.
The ruling Morena party, led by López Obrador, also approved a bill to rewrite the rules governing how power plants inject power into the grid, requiring cheaper and often renewable energy to come first. Reverted a previous change that was in favor of National Power Plants instead.
Government officials have also blocked commercial operation of at least 14 privately owned wind and solar plants already built, according to two industry executives who requested anonymity for fear of government retaliation.
The government also favors energy from state-owned coal, gas and fuel oil-fired plants over privately-owned renewables in its order to power the national grid, citing the need for reliability of the energy system. are prioritized.
The practice was carried out “without apparent justification,” according to a report released last year by a U.S.-based company hired by Mexico to oversee Mexico’s energy sector. Although it has ruled key parts of the policy unconstitutional, it is still enforced, according to industry officials.
And despite blocking renewable energy, the state plans to invest $6.2 billion to build 15 fossil-fuel power plants by 2024, government documents say. is showing.
The government’s targeting of the renewable energy sector has had a major impact on the economy. Foreign direct investment in the energy sector fell from $5 billion in 2018 when Lopez Obrador took office to less than $600 million last year, according to government figures.
“Mexico is not open to energy investment,” Payan said. “It’s just been shut down.”
US companies have already invested heavily in Mexico’s energy sector, so the policy change is a source of growing tensions with Washington.
“We have repeatedly expressed serious concerns about the series of changes in Mexico’s energy policy,” U.S. Trade Representative Catherine Tai said in a statement. I am continuing.”
At a press conference, Lopez Obrador appeared to shrug his shoulders at the US warning, playing a video of the Mexican song “Oh, how scary.”
Mexican leader Said His country can only accept foreign investment in renewable projects if the Department of Energy is in charge of planning and a state-owned utility company has a majority share. Possible Violation of Mexico’s trade deal with the United States.
López Obrador claims Mexico will meet its goal under the 2015 Paris Agreement to produce 35% of its electricity from renewable sources by 2024, but a government report released earlier this year The report showed that the country was years behind on that goal.
Many environmentalists and renewable energy experts say their focus is on Mexico’s upcoming presidential election in two years’ time and hope the administration will be friendly to renewable power. .
“Whoever takes office in 2024 will have to address serious deficiencies in the energy sector,” Martin said. But as for the Paris Agreement, “that ship has sailed,” he added.