Mexican Government Policies on Renewable Energies

On November 24, 2021, the Chairman of the Energy Commission of the Chamber of representatives, participated in a discussion related to the Constitutional Reform Initiative on electricity matters (“the Initiative”).

Likewise, on November 18, 2021, Mexico participated in the 9th North American Leaders' Summit, and along with the United States and Canada, published the "Joint Statement by North American Leaders: Building Back Better Together", through which they stated that one of their objectives is to fight climate change.

I. HIGHLIGHTS

From the above, several relevant points regarding the Mexican government policies on renewable energy can be deduced.

First, regarding the Initiative, the Chairman of the Energy Commission mentioned that open parliament forums will be held for specific topics, in which those who wish to participate will be invited, and especially those who have a direct interest in the subject. Concrete proposals will also be received in writing.

The foregoing denotes the possibility for stakeholders to participate in the process of analyzing the Initiative. However, it is worth mentioning that, although the Initiative may be strengthened or modified, it must maintain its substance, which includes (i) state stewardship, (ii) energy transition, (iii) tariffs and (iv) lithium.

Likewise, Chairman of the Energy Commission, emphasize the following points, regarding investors and private sector:

Investors: they will seek investment in latest generation batteries that can provide backup energy, currently provided by the CFE, which has a cost. 

They will seek to guarantee the investments made and shares in the electricity market; and that domestic or industrial users benefit from economic and competitive rates in relation to the international market.

Private sector: the participation of the private sector will be guaranteed at the 46% established in the Initiative. This does not mean that the private companies or CFE do not generate a little more capacity on certain days.

Independent Generators: the best tariffs will be seek in order to be competitive at international market prices.

Second, as a result of the 9^th North American Leaders' Summit, Mexico, the United States and Canada committed to:

1. Work closely together to accelerate renewable energy deployment in North America, recognizing policies and priorities and catalyzing finance and technology for the service of renewable energy.

In this regard, Chairman of the Energy Commission pointed out that in terms of energy transition, the goal is that by 2024, 35% of the generation will come from renewable energies.

2. Launch efforts to enhance cooperation in the transition with the goal of developing a strategy to ensure the competitiveness, prosperity, environmental sustainability, and social inclusion of the sector throughout the region.

In this regard, Chairman of the Energy Commission mentioned that there is a commitment with the energy transition, which is why, through the Initiative, it is elevated to constitutional level, leaving the responsibility for such transition to the Mexican State.

3. Work together to promote the commitment of the aviation industries of each country, for the goal of zero net GHG emissions by 2050, and to catalyze the use of cleaner fuels in their rail, air, and maritime transportation sectors. As well as to accelerate the manufacture and deployment of zero-emission vehicles, in the interest of achieving an all-electric future.

In this regard, the Chairman of the Energy Commission mentioned that the electricity sector is expected to grow steadily, given the gradual substitution of fossil fuels, which will increase the demand for electricity.

In addition, the North American Leaders' aims include commitments to zero net deforestation; conservation of 30 percent of North America's land and waters by 2030; enhanced ocean strategies; among other trilateral actions to address climate change from an inclusive perspective.

From the aforementioned, it is clear that the Mexican government has adopted renewable energy policies that have an impact on investors and private sector. Such as the commitments to promote the deployment of renewable energy, so that by 2024, 35% of generation will come from renewable energies; to catalyze the use of cleaner fuels in the rail, air, and maritime transportation sectors; to promote the use of zero-emission vehicles; among others.

However, it is not possible to ignore that some of the policies taken by the Mexican Government have affected several renewable energy projects, hence it will be important to see if the new energy reform  proposed by the president will be approved. Since this reform will hinder greatly  any investments in renewable energies.