Mexico’s climate goals have been left behind as President Lopez Obrador continues to put up roadblocks to renewables.
On July 1, 2022, in his home state of Tabasco, Mexico President Andres Manuel Lopez Obrador celebrated his government’s latest triumph: a new oil refinery.
Though the plant officially opened on Friday, July 1, in a ceremony attended by the president himself, the units designed to distill oil into gasoline stood quiet and idle next to construction equipment that suggested there’s still more work to be done.
“We’re getting ready to stop importing gasoline, diesel, and jet fuel, in order to be self-sufficient, create employment in the country, and direct these fuels at the internal market and national development,” said AMLO, as the president is known, flanked by Energy Minister Rocio Nahle and Petroleos Mexicanos Chief Executive Officer Octavio Romero Oropeza.
AMLO hailed the refinery as a centerpiece in his grand campaign to secure Mexico’s energy independence, saying to the cheering crowd, “We ignored the sirens’ song, the voices that predicted, in good faith, perhaps, the end of the oil age and the massive arrival of electric cars and renewable energies.”
An interesting situation is brewing, now that Russia has invaded Ukraine. Europe and the United States are moving to increase oil and gas production to counter bans on Russian energy. However, AMLO is taking things a step further.
Driven by Mr. López Obrador’s long-held goal to wrest control of the energy sector from private companies and allow state firms to dominate the market, the government is undermining efforts to expand renewable power and staking the nation’s future on fossil fuels.
This plan may prove to be dangerous, as it has attracted widespread criticism. Opponents are fearful of the creation of a state-run energy monopoly, and the law appears to prioritize fossil fuels as it stops the growth of renewables – something that private companies have largely driven. This also potentially threatens Mexico’s climate commitments.
Mexico’s current practice of importing its own oil, having been refined overseas, is like selling oranges to foreign markets and buying their orange juice, AMLO has said. For this reason, he is revitalizing six of Mexico’s oil refineries and investing in a new one, Dos Bocas.
Amlo then has a plan that involves giving sole authority to the CFE as the sole seller of energy to end users; privileging the energy generated by the CFE in the electrical system over that of private companies, and centralizing activities such as planning and directing the energy transition within the state company.
If the CFE becomes the sole seller of energy, large consumers will no longer have the option of generating their own energy or buying it from private producers. As things stand, independent energy producers contribute approximately 27 percent to Mexico’s total national electricity supply, while self-supply represents 15 percent, according to CFE data.
The biggest concern is that if all this comes to pass, it would make the state-regulated energy company self-regulating. This issue alone violates the terms of the United States-Mexico-Canada Agreement (USMCA), which guides North American economic policy.
This story will bear watching as it continues to grow. Ande something is going to have to give, pretty soon.
