A senior executive of carmaker General Motors (GM) raised concern about the future of renewable energy usage in Mexico, saying that without a solid legal basis for it, automotive investment in Mexico would suffer.
During a panel discussion in Mexico City, Francisco Garza, chief executive of GM Mexico, said it was important for Mexico to forge conditions enabling investment in renewables, to which the company was itself committed, reports Reuters.
“Unfortunately, if the conditions aren’t there, Mexico won’t be a destination for investment, because the conditions won’t be given that permit us to meet our objective of having zero emissions in the long term,” Garza said.
“We’re evaluating that if there aren’t the conditions, that dollar that was going to be invested in Mexico will go to the United States, Brazil, China, or Europe, and Mexico will no longer be a key destination,” he added.
While Garza’s comments did not explicitly reference Mexican President Andrés Manuel López Obrador’s (AMLO) proposed initiative that electricity should be “owned by the nation, by all Mexicans,” others on the panel did reference it.
General Motors has been one of the top investors in Mexico, dating back to the start of the North American Free Trade Agreement in 1994. Earlier this year, the carmaker announced it planned to invest $1 billion to build electric vehicles in the northern state of Coahuila.
After Garza spoke, a spokesperson for GM Mexico, Teresa Cid told Reuters that GM was “at no time threatening” not to make the investments it had pledged for Mexico.
However, she added that “GM must meet its (zero emissions) vision and we must follow that path,” she said. “So that’s where the risk would be.”
Mexico Energy Initiative
The main idea behind AMLO’s plan is to strengthen the Federal Electricity Commission (Comisión Federal de Electricidad, CFE), giving them almost total control over energy in the country.
To that end, by the middle of October, the Energy Regulatory Commission (CRE) shut down three US-owned terminals that are used to import fuels such as gasoline and diesel and are located in Tuxpan, Veracruz, Puebla City, and Hermosillo, Sonora.
Under AMLO’s new rules, the state-run CFE will continue to dominate the market, with at least a 54 percent share. It will also regain the regulatory powers it had lost to autonomous bodies in 2013.
Fitch Ratings points out that the CRE and the National Hydrocarbon Commission would be abolished, diminishing the system’s operating transparency and competition, as well as leaving no independent arbitrators.
Clean Energy Certificates would also be canceled, eliminating one of the primary mechanisms to promote new clean power generation projects in Mexico.
Currently, about 60 percent of the country’s electricity comes from GenCos, mostly through efficient gas-fired facilities and renewable energy sources. Under the new proposal, private power generation would be limited to 46 percent of the country’s load and must be sold only to CFE through bilateral contracts.
The proposal could further weaken Mexico’s rule of law and may discourage future private investments in the sector, and that will be a disaster for Mexico’s economy.
