Some Like It Hot: Mexico’s Ambivalent Policy Toward Climate Change

Contradictions in Mexico's Current Climate Change Polices

This report examines Mexico’s ambivalence toward climate change policy in the context of an increasingly complex international environment that lacks a clear strategy for decarbonization on a global scale. Mexico’s ambivalence is palpable in policy actions that appear to move in opposite directions.

On the one hand, the administration of Mexican President Andrés Manuel López Obrador made its largest public investment in the construction of the Dos Bocas Refinery in his home state of Tabasco. This project appears to reaffirm Mexico’s commitment to fossil fuels for a long time to come.

On the other hand, with only a year and a half left in office, the president announced the Sonora Plan, a project that consists of building massive solar generation plants in the state of Sonora in order to export electricity to the United States. The project gives a softer image to the administration’s energy policy, making it appear less oblivious to global warming and more inclined toward climate activism.

Adding to this confusion are a series of administrative and legal actions taken by the López Obrador government that impede the development of renewable energy. These actions include establishing entry barriers into the Mexican electricity market and the ongoing refusal by the Federal Energy Regulatory Commission (CRE) — largely coopted by the López Obrador administration — to grant generators permits to participate as direct suppliers to consumers.

Moreover, soon after the Sonora Plan announcement was made, news came of the impending arrival of Tesla to Monterrey, Nuevo León, where the company intends to locate one of its electric vehicle gigafactories. It was also reported that Tesla’s future plant would use solar power generated not by the private sector, but by Mexico’s public electric utility, the Federal Electricity Commission (CFE) — specifically the CFE’s solar plants built under the Sonora Plan. This would effectively transform the state of Nuevo León into a clean energy hub for nearshoring.[1]

Lastly, the commissioner who was appointed to lead the CRE previously served as the director of renewable energy in Mexico’s Department of Energy, which suggests that he will expedite sun and wind energy generation permits that have been stalled for years.

Does all this mean that López Obrador and his government are shifting from fossil fuels to renewable energy and have become clean energy advocates or even climate change activists? Or is this change the result of external commercial and diplomatic pressures by Mexico’s USMCA (United States-Mexico-Canada Agreement) partners, who have argued that the López Obrador government is in breach of the agreement and blocking competition in the electricity market by discriminating against private, and particularly renewable, generators?

Mexico’s Policy Contradictions are Fueling Its Climate Change Challenges

To answer these questions, it is important to look at Mexico as a country significantly exposed to the effects of climate change. It is also crucial to examine the relevant policy measures implemented to address this risk by the last two presidential administrations. This approach will give observers a baseline to see that, from the beginning and throughout most of his term, López Obrador has taken steps toward reverting prior climate change policies. It will also help clarify why, during his last full year in office, López Obrador has suddenly turned to solar power generation, allowed the exploitation of lithium and other minerals for batteries, and sought to facilitate TESLA’s electric vehicle factory.

Given the fossil fuel-centered policies and projects that have dominated the López Obrador administration, it would seem that the recent clean energy turn, including the Sonora Plan, are attempts to lower tensions with the United States — tensions unresolved during the July 2022 consultation processes called for by the United States Trade Representative (USTR) (which may still end up in state-to-state arbitration). If this turn to renewables is simply to avoid a trade dispute, by increasing clean energy in bordering states, then it is less than meets the eye. Moreover, northern states will likely move on to renewables while southern states will continue to rely on fossil fuel projects and policies, further widening the development gap between North and South — a gap López Obrador promised to reduce.

To analyze these issues and to understand the motives underlying Mexico’s contradictory policies, this report is divided into three parts. First, it summarizes the main points of the current climate change debate and Mexico’s position in it. Second, it examines the climate change policy measures taken under the two most recent governments — led by Felipe Calderón (2006-2012) and Enrique Peña Nieto (2012-2018) — and describes how the López Obrador administration reversed those policies. Finally, this report looks at the commercial and diplomatic disagreements of Mexico’s USMCA partners on energy and argues that recent clean projects were approved primarily to lower these tensions rather than being the product of a true commitment to combatting climate change.

The World is Hotter — and Mexico Seems Cool With It

The 2022 United Nations Climate Change Conference (COP 27) was followed by unprecedented geopolitical turbulence. The Russian invasion of Ukraine, only three months after COP 27, caused disruptions in energy markets around the world. Even before winter, consumer markets were suffering from soaring natural gas prices, and governments were already activating alerts, inviting reduction of electricity consumption in the face of falling fuel supplies.[2] Fortunately, the European winter was mild and natural gas prices were lower than expected.[3] Nonetheless, according to the International Energy Agency (IEA), the “EU faces a potential shortfall of almost 30 billion cubic meters of natural gas this year.”[4] The IEA pointed out that the crisis shifted the focus of national energy policies toward becoming free from dependence on hydrocarbon imports and “the price and resource volatility this entails.”[5] The IEA also stated that this geopolitical conundrum placed energy security at the top of any policy agenda.[6] The agency saw the war as a call for an “accelerated energy transition.”

The World Economic Forum, however, has seen uneven implementation, as some countries “are accelerating their emission targets, [while] others are increasing their use of coal, and some countries are doing both at the same time. The longer-term impact of the energy crisis on emissions is unclear, and many people are concerned about the impact on plans to reach net-zero emissions by 2050.”[7]

A notable example is Germany, which once enjoyed recognition for its efforts to change its energy mix toward renewable sources, but has increased its consumption of coal[8] since the war in Ukraine began. When faced with the risk of freezing homes and paralyzed industries, it decided that global warming could wait. The question for decision-makers is now about when and how to move toward net-zero emissions without risking scarcity.

It's Not Easy Being Green When Social and Economic Goals Collide

Even before the war in Ukraine, contrasting views about the social and economic impacts of the energy transition resulted in moderate commitments from COP 27 countries to reduce, rather than abandon, fossil fuels. For this reason, when the COP 27 closed, its critics outnumbered enthusiasts.[9] Frans Timmerman, executive vice-president of the European Union, was curt in saying that they had “fallen short” because “the language regarding the increase of global temperatures to 1.5 Co is too weak.” He threatened to leave the negotiations, but relented toward the end of the conference and said that “we are disappointed for not having achieved more.”[10]

Even so, some agreements were reached at the conference. The main one consisted of doubling the financial backing for energy transitions. Developed countries will be responsible for funding state-of-the-art programs for the mitigation and adaptation of climate change. Both the EU and the U.S. presented plans to solve the obstacles faced by Latin American and Caribbean countries while trying to obtain financing for the implementation of measures that reduce the effects of climate change.

According to the World Meteorological Organization, the agreements reached during COP 27 can be grouped into “four pillars”:

• Disaster risk knowledge (US$374 million) to systematically collect data and undertake risk assessments on hazards and vulnerabilities;
• Observations and forecasting (US$1.18 billion) to develop hazard monitoring and early warning services;
• Preparedness and response (US$1 billion) to build national and community response capabilities;
• Dissemination and communication (US$550 million) to communicate risk information so it reaches all those who need it and is understandable and usable.

Thus, the plan identifies key areas for advancing universal disaster risk knowledge and outlines the priority actions required to achieve this, building on the Sendai Framework for Disaster Risk Reduction.[11]

Once COP 27 ended, the world’s bigger carbon emitters, including Mexico (No. 12), should have engaged in continuous negotiations and actions to reduce greenhouse gas (GHG) emissions. Pursuant to the agreements, the main goal is the delivery of financial mechanisms for the relief of damages and losses caused by global warming, while increasing the mitigation of emissions. Mexico, to comply, must reengage and develop an energy transition strategy.

But then came the Russian invasion of Ukraine, which disrupted the supply and demand of energy and, ironically, the security of stable, reliable, and reasonably priced fossil fuels such as natural gas, which are key to achieving a smoother and safer transition. In response, some governments made “panic” decisions that are contrary to climate change goals, as happened in Germany. Others, like the U.S., passed legislation to abate inflation by expanding electric mobility, renewable power supply, and related infrastructure. Ironically, the U.S. can do this because, as a result of the crisis, it has become one of the world’s largest fossil fuel exporters.[12] In a hydrocarbon market where sellers set the rules, the U.S. can and has accelerated its transition targets far and wide. Whether these policies are feasible, reasonable, or capable of succeeding is beyond the scope of this report.

President Joe Biden’s Bipartisan Infrastructure Bill and Inflation Reduction Act are initiatives composed of ambitious legal and policy tools aimed at saving on energy bills, the purchase of electric vehicles and energy-saving appliances, and accessing the economic opportunities of a clean energy future. Biden’s Bipartisan Infrastructure Bill contains an extensive institutional, legal, and financial scaffold for the development and transformation of clean water, public transit, passenger rail, public grid modernization, electric buses, roads, bridges with increased resilience, and even affordable high-speed internet.[13] This new regulation plan for the U.S. is aimed at lowering emissions by 87% by 2030 compared to 2005 levels.[14]

One of the goals of these investments — in force as of January 2023 — is to accelerate the reduction of subsidies to fossil fuels, while providing incentives for the expansion of clean energies and electric vehicles.[15] It is worth noting that these actions coincided with the North American Summit, in which U.S. Energy Secretary Jennifer Granholm emphasized her government’s will to join its partners in the transition toward decarbonization. After the summit, Granholm spoke of Mexico’s substantive potential to generate and export solar power to the United States. The López Obrador government appeared receptive.[16] In addition, a joint effort to create a green hydrogen hub[17] shared between Canada, the U.S., and Mexico was announced as a result of the summit.

However, the apparently productive interactions between Mexico and its North American partners generated by COP 27 do not reveal the accumulated tensions created by the significant legal and regulatory changes implemented by the López Obrador government within the hydrocarbons and electricity sectors. In fact, very little has changed in Mexico despite visits from the special presidential envoy for climate, John Kerry, who raised concerns over Mexico’s recarbonization of its energy industry (which has had a negative impact on the country’s commitments to global climate change efforts); from U.S. Trade Representative Katherine Tai, who repeatedly warned of serious violations to several provisions of the USMCA; from Secretary of Energy Jennifer Granholm, who sought to persuade the López Obrador administration of joining hands into a broader North American energy platform; from Secretary of State Antony Blinken, who kept diplomatic channels open; and from Ambassador Ken Salazar, who organized meetings between the López Obrador government and at least 17 companies affected by the policy shift.[18]

Extended twice, consultations between USMCA parties began in August 2022 as a way to avoid a costly and potentially damaging arbitration panel between the U.S., Canada, and Mexico but have not yet born fruit.[19] One of sources of discontent with Mexico is its refusal to award renewable generation permits to private sector companies, which is the basis of a cleaner energy mix. Furthermore, the dispatch order for power generators now contained in Mexican law favors the CFE over any other actors — leading to the core complaint of discriminatory treatment of private companies (although there are environmental concerns as well). That is because the CFE’s hydroelectric generators, which are given preference to provide power and are deemed clean, can only deliver electricity to consumers at about 33% of the national installed generation capacity.[20] Thus, even if hydroelectric plants are given priority as a supplier, the CFE’s older and more polluting facilities, such as its thermoelectric facilities, are next in line to make up for the shortfall.

López Obrador’s policies push global warming to the back burner and empower the two national energy state-owned companies (Pemex and the CFE), which have shown disregard for sustainability.[21] Even if Mexico has adopted a discourse that appeals to stronger energy transition advocates — particularly the Biden administration — its president’s actions contradict clean energy goals. Thus, this report argues that one solar plant (or even a few) does not equate to an actual energy transition.

Climate Change Dangers for Mexico Are More Than Hot Air

The United Nations has identified Mexico as vulnerable to the impacts of global warming, many of which are irreversible, including sea level rises affecting coastal areas in inland basins, stronger hurricanes, changes in water precipitation cycles, net decreases in water runoffs, and other risks. Given the long-term and irreversible character of these changes, impacted areas include water resources, forestry, agriculture, coastal zones, and, in particular, wetlands. Droughts and desertification are expected to increase as well.[22]

Consequently, the increase in temperatures of the Gulf of Mexico and rising sea levels will negatively affect human activity. The climate crisis will be particularly severe for the poor, as their options to adapt and stay safe from disasters are more restricted.[23] As the Organization for Economic Cooperation and Development (OECD) stated, “While climate change is a global phenomenon, its negative impacts are more severely felt by poor people and poor countries. They are more vulnerable because of their high dependence on natural resources, and their limited capacity to cope with climate variability and extremes, and will do so increasingly in the future.”[24]

How Much Has Changed Since Prior Administrations?

The Felipe Calderón Administration

The National Development Plan (PND) is the document that established the priorities for development of the executive branch. Under the Felipe Calderón administration (December 2006 through November 2012), Mexico formulated its first National Climate Change Strategy in May 2007. The novelty in Calderón’s PND is that it “identifies opportunities for emissions reductions on a voluntary basis, as well as measures for the development of necessary national and local capacity for response and adaptation. The Strategy proposes concrete adaptation and mitigation measures for all sectors, including agriculture, covering all the main aspects of climate change policy.”[25]

It was during the Calderón administration that several climate-related initiatives began. Some of the most notable included the creation of an Inter‐Ministerial Commission on Climate Change,[26] the development of a National Strategy on Climate Change, and the elaboration of a Special Program that set adaptation policies and strategies for the reduction of disasters. Legislatively, in 2012, Mexico’s Congress approved its country’s first specific Climate Change Law.[27] Before that, in 2008, as part of the president’s energy reform package, the Law for the Enjoyment of Renewable Energies and the Financing of the Energy Transition were both enacted.[28] Notably, it was during the Calderón administration that Mexico placed itself on the map as a relevant international actor in the quest against global warming. Regarding Mexico’s rising position in climate diplomacy, Gustavo Sosa-Núñez and Simone Lucatello [29] explain,

“Mexico became an active player in diplomatic circles with respect to climate change issues during the last presidential term (2006-2012), with former President Felipe Calderón. Mexico was vigorously involved in a number of international events aimed at discussing approaches to tackle climate change. At the 15th Conference of the Parties (COP 15) — in Copenhagen — Mr. Calderón announced that Mexico was ready to reduce emissions of greenhouse gases (GHG).”

Thus, considering the growing visibility of Mexico as a GHG reduction advocate, Calderón followed up with hosting COP 16 in Cancún in 2010. Sosa-Núñez and Lucatello further explain,

“The COP 16 was highly regarded. Mexican diplomacy was credited for regaining trust on multilateral climate negotiations. … At the time, the Cancun agreements became the largest collective effort the world saw to reduce emissions with national plans formally compiled at the international level, as everybody showed commitment and responsibility to act. The creation of a Green Climate Fund (GCF), similar prioritization to mitigation and adaptation strategies, as well as plans to set ambitious emissions reduction targets stood out as key issues.”[30]

Two years after the acclaimed COP 16, shortly before Calderón left office, Mexico was the first country to enact national legislation within the United Nations Framework Convention on Climate Change (UNFCCC). The General Law on Climate Change sets forth binding commitments to reduce 50% of GHG emissions by 2050,[31] while giving priority to mitigation and adaptation strategies and actions.[32]

Other important milestones toward the reduction of GHG emissions under the Calderón administration included the enactment of the Law for the Utilization of Renewable Energies (Renewable Law) and the Financing of the Energy Transition Act of 2008 (both of which took place before the General Law of Climate Change was put in place). Although renewable projects had already been in place in Mexico since the beginning of the second millennium, these laws set forth incentives for their development — including the inclusion of US$220 million a year to fund projects related to renewable energy. Significantly, the law requires the Department of Energy and the CRE to create new rules to offer incentives for the renewable energy industry in Mexico.[33] Considering the contribution that renewable energy provides to price stability, the law sets forth an obligation on behalf of regulatory authorities to establish a price methodology that considers such efficiencies. The most notable feature of the Renewable Law was introduced in a 2011 initiative that established maximum targets of fossil generation in the energy mix by the years 2024, 2035, and 2050. The energy targets are as follows: 65% of fossil generation by 2024; 60% by 2035, and 50% by 2050.[34] Also, as a result of regulatory action, the aforementioned preferential transmission rate and an “energy bank”[35] were established to attract renewable investment to Mexico.

Notably, Calderón had supported, through his entire administration, a differentiated treatment for developing countries in terms of commitments and responsibilities. Paradoxically, he believed that the emissions of developing countries would satisfy their needs for development,[36] instead of being a serious environmental hazard. Notwithstanding the fact that Calderón believed that all countries must contribute, within the realm of their possibilities, to combating climate change, he maintained his opposition to developing countries obligating themselves through punishable binding commitments if breached. If anything, the Calderón government’s main achievement was to increase the awareness of the seriousness of the problem and its devastating environmental and human consequences. He also stressed that the impacts are more excruciating in poor countries.[37]

The Enrique Peña Nieto Administration

The Enrique Peña Nieto administration followed a different path when it came to climate change and the energy nexus. Although the 2013 energy reform was triggered by Mexico’s bountiful shale gas reserves, during this administration, renewable energy investment surpassed investment in gas. In fact, there were no calls for tenders for shale gas fields,[38] although three were undertaken for power generation. But a full 42 producers were awarded permits for solar and wind power projects.[39] Thus, reform that was intended to help Mexico follow North America in its unconventional fossil fuel revolution changed course and became a pathway for renewable projects.

While the Paris Agreement was approved in December 2015 when Calderón was still president, Mexico actually ratified it in 2018 after Peña Nieto had taken office. Peña Nieto took significant steps in terms of building climate policy, but he made no specific commitments to climate change goals during international conferences sponsored by the United Nations during his term in office. This was presumably because he agreed with Calderón that developing countries should not be penalized for lacking the resources to pursue ambitious climate change agendas.

Beyond that, several changes were approved in 2018 to the Mexican General Law on Climate Change (LGCC) in terms of emissions reductions. These changes took place during the last year of the Peña Nieto administration, following five years of electricity reform that widened the entry to renewables. As a result of the opening up of generation, supply, and trading of power, the number of renewable projects grew significantly in Mexico.[40] This explains why, by the end of Peña Nieto’s government, the conditions to amend the LGCC to fulfill the terms of the Paris Agreement were ripe.[41] As the Paris Agreement is binding, the parties to it must incorporate obligatory commitments into their domestic legislation designed to abate global warming.

In July 2018, during the last semester of the Peña administration, the LGCC was modified to fulfill the Paris Agreement obligations, “incorporating the goal to limit the increase of the average temperature of the planet to less than 2°C.” The LGCC also adopted the Nationally Determined Contribution (NDC)[42] “as an associated instrument in combination with the development of a transparency framework.” According to the International Energy Agency, Mexico’s NDC commitment, as set forth in the LGCC, included strategies for institutional empowerment, such as the creation and alignment of different organizations and instruments responsible for public policy on climate change. These organizations included the National Institute of Ecology and Climate Change, the Climate Change Council, and the Inter-secretariat Commission for Climate Change, among others.[43]

The financing and channeling of projects to combat climate change is a salient aspect of these reform efforts. The IEA states, “Priority areas include energy efficiency projects, renewable energy development, and elimination or use of fugitive methane emissions and associated gas (Article 82). The Law stipulates that federal entities and municipalities should promote the design and expansion of policies and mitigation actions to reduce emissions (Article 34).”

As for methane venting and flaring, funds should have been channeled to prevent such emissions.[44] The increase in clean energy, energy efficiency and methane reduction technologies were designed to reduce emissions by 30% by 2020 and by 50% by 2050, in comparison to 2000. However, this has not happened. As the Climate Tracker Action reports, Mexico’s climate policies under President López Obrador continue to go backward, as fossil fuel use is prioritized and climate-related policies and institutions are dismantled. This puts the country’s emissions pathway even further from the Paris Agreement 1.5°C goal. Mexico’s greenhouse gas emissions continue to rise — despite the brief dip caused by the COVID-19 pandemic — and are projected to continue increasing through 2030. Mexico is on track to achieve its old and new unambitious climate targets in 2030. For Mexico to reverse trends and transition toward a 1.5°C-compatible pathway, it needs to reverse its policies, move away from fossil fuels, foster renewable energy, and tackle the transport sector.[45]

The actions that reverse Mexico’s commitments to reduce emissions will be analyzed in the following sections. However, it is also interesting to look at the mixed reviews of Mexico’s climate plan as announced at the 2022 United Nations Climate Change Conference (COP 27).

Mexico’s Current Climate Change Plan

One of the most striking aspects of Mexico’s climate plan as presented at COP 27 was a joint statement made with the U.S. special presidential envoy for climate, John Kerry. In it, both countries pledged to join forces to limit global warming to 1.5 Co and to achieve net zero greenhouse gas emissions by 2050. The secretary of foreign relations, Marcelo Ebrard, announced “an implementation and investment plan of nearly $2 billion USD, and a shared goal to achieve a 50% sales share for zero-emission vehicles in 2030.”[46] Also, the Mexican government announced its intention to deploy more than “130 additional gigawatts of combined wind, solar, geothermal and hydroelectric capacity by 2030, reaching more than 40 gigawatts of combined wind and solar energy.”[47]

These pledges are the basis for reaching Mexico’s upgraded NDCs, which include “an unconditional target to reduce emissions by 35% from business-as-usual levels by 2030.”[48] In response, Kerry expressed that the United States backs its neighbor’s aims of expanding its renewable energy capacity and that it will aid Mexico in pursuit of these goals by mobilizing financial support to spur renewable energy generation and transmission. This is in addition to the US$48 billion preliminary investment plan presented by the Mexican government for the implementation of renewable energy and related infrastructure.. For these reasons, the López Obrador administration’s initiative to reduce GHG emissions was hailed by Kerry, as “one of the most outstanding contributions among the G20 countries,” as it took a significantly positive shift from the Glasgow 2021 United Nations Climate Change Conference (COP 26) by “significantly strengthening its 2030 target.”[49]

Kerry’s enthusiasm was not shared by analysts, who explained the underlying reasons for the plan. Political risk analyst Carlos Ramírez stated that it was all a matter of green diplomacy: Secretary Marcelo Ebrard, an aspiring presidential candidate, has become “climate friendly” to improve his chances to become his party’s nominee in the upcoming elections.[50]

Another presidential runner, Claudia Sheinbaum, is a contributor to the Intergovernmental Panel on Climate Change. As mayor of Mexico City, she has promoted isolated projects to reduce GHG emissions,[51] though they do not add to a holistic carbon reduction program. Her featured projects are solar roof tops in Mexico City’s largest central market (Central de Abastos) and the expansion of electric transportation services.[52] Sheinbaum’s track record as a scientist and as a relevant participant in the Intergovernmental Panel on Climate Change makes her more likely than Ebrard to follow through on climate policy. Nonetheless, Ramírez says that her political aspirations compromise her environmental convictions. According to Ramírez, “Sheinbaum may make Mexico more devoted to climate action. But it would be difficult to overturn López Obrador’s pro-fossil fuel policies, particularly as he will remain popular and powerful even after stepping down as president.”[53]

Mexico’s Domestic Policy: It Is Not Greener on The Other Side

While Mexico has shown concern about climate change in the diplomatic arena and has made pledges to expand renewable energies and deploy carbon reduction measures, the opposite has occurred in domestic law and policy. Even before he was elected, President López Obrador vilified “windmills” for being unaesthetic, cumbersome to the natural landscape, and, above all, unreliable when it comes to providing secure and stable power to Mexican homes.[54] Once in office, the CEO of the CFE, Manuel Bartlett, joined the president in his criticism of renewable energy, whether wind or solar. This was a cause for concern but did not materialize into concrete threats until a series of regulatory and legal actions took place that proved Mexico’s unwillingness to reduce emissions. And more and more, the Mexican government’s plans to abate global warming, as pledged at COP 26 and COP 27, are inconsistent with Mexican laws and policies at home.

The first blow to renewable generators was a price hike of 800% in transmission rates, as the CFE is still owner of the grid. According to Bartlett, private projects were getting “the lion’s share” of the contracts, as these rates had been established between 2014 and 2015 to give private generation unjustified preferential treatment and had not been raised since, despite rising transmission costs.[55] Complicit in this, the CRE issued a ruling in which it “ordered” the CFE to raise these rates by 800%. Generators argued, to no avail, that they had made substantial investments in the grid, primarily because maintenance of the grid had been poor.[56] The outcome of a lack of accord between the generators and the government was myriad constitutional challenges that have, so far, created a standstill that is allowing generators to continue paying the preferential rate.[57]

The Electric Public Service Reliability Policy is a second attempt to exclude renewable power generation companies from providing electricity. As Mexico entered the COVID-19 pandemic, and uncertainty ensued with regard to its consequences, the Department of Energy, backed by the CFE, issued an administrative order that barred renewable companies from connecting to the transmission grid, the justification being that the intermittency of sun and wind power only added risk to Mexican consumers. According to the order, renewable energy sources did not operate under conditions sufficient to guarantee the integrity, reliability, and continuity of electric service, and were to be barred from connecting to the transmission grid. Without providing evidence, the government claimed that the unreliability of sun and wind generation could destabilize the nation’s electric supply, causing power outages and putting the nation’s energy security at risk in critical times. The next day, without warning, renewable energy plants were ordered to disconnect from the grid or were barred from connecting to it to perform tests in the case of new projects. As with the transmission pricing methodology, this order was challenged in court not only by companies, but also by non-governmental organizations and even the Federal Anti-Trust Commission, which filed before the Mexican Supreme Court. The required majority of justices voted against the order, and it was ruled null and void.

The overarching lesson of these two failed attempts to marginalize renewable generators was that it could not be done singlehandedly by an administrative agency in violation of the law. In the case of the pricing methodology, even when there is no specific legal provision that establishes how the CRE must define its pricing parameters, the justices ruled that an abrupt and extreme hike in the transmission rate contravened the essential principles of a “non-retroactive application of a rule” to the disadvantage of a third party.[58] Also, the fact that this disproportionate increase occurred only for renewable generators was deemed by the justices as discriminatory, both to the companies and their consumers, whose electricity bills would soar with the extreme rise in transmission costs.[59]

As for the Electric Public Service Reliability Policy, the justices ruled that it was contrary to several constitutional principles such as the free markets principle, wherein renewables are allowed to participate without barriers, as well as the right to a clean environment, aided by carbon-free renewable energy. Additionally, during three power auctions, renewable companies proved to be the most price competitive while offering the cheapest electricity to the CFE.[60]

These judicial results made President López Obrador reflect on the fact that, despite his tight grip on the CRE, CFE, and the Department of Energy, these kinds of administrative acts could be challenged in Mexico’s courts, which are beyond his control. López Obrador, however, still held the majority of Congress, which meant that, if his policies indeed violated the law, then one remedy would be to change the law. And he did.

The reforms to the Electric Industry Law contradict the lowering of carbon emissions since they place the CFE as the centerpiece of the power industry. The changes made to the Electric Industry Law are still in force, because the Supreme Court could not agree on a ruling.[61] The Supreme Court would need eight votes out of the 11 to invalidate the reforms. The split among the justices, however, made it impossible to reach a consensus. As a result, some specific provisions remain in force, while others are in limbo. That is, some articles were voted by eight justices as consistent with Mexico’s constitutional framework, while others failed to get enough votes against them to be “expunged” from Mexican law.

One of the reforms working against renewables that survived judicial scrutiny was the CFE’s new ability to auction the power it purchases for public service. This means that the Mexican utility may dispatch the power generated by its own plants, even if it is costlier and more polluting, under the guise that it is better for the Mexican public.

During the discussion of reforms, CFE CEO Bartlett argued that the power auctions were corrupt and that the low prices offered by renewables were a sham because they were not representative of real costs. Bartlett also argued that the CFE is the only generator capable of selling the cheapest energy to its consumers because, as a state-owned utility, it looks out for the common good.[62]

Another provision that prevailed was Article 4, Section VI, of the amended Electricity Industry Law, which now specifies “the electricity dispatch order priority for supply as follows: 1) The CFE’s hydroelectric plants come first; 2) other CFE facilities come second; 3) renewable energy generators come third; and 4) privately owned combined cycle plants are last.” In other words, the most evident change in the way power will be injected into the grid is that it gives utmost priority to the CFE as a generator, disregarding environmental and other impacts.[63]

Yet another “reform” provision is Article 126, Section II, of the Electricity Industry Law, which survived in court and allows the CFE’s older projects to acquire clean energy certificates even when they use obsolete and polluting technologies. “These certificates were created as an incentive to develop cleaner energy plants, but the CFE has not invested in such facilities — and now it does not have to. Consequently, according to analysts, a sharp increase in the supply of these certificates will allow the CFE’s older plants to be traded, which will reduce their value dramatically.”[64] That this article is still in force is another blow in the struggle against lowering emissions.

Constitutional Shocks and Consultations Cause Cross-Border Tensions

Mexico’s Supreme Court ruling that left the most environmentally hazardous reforms unchanged was quickly[65] followed by a failed initiative, submitted by the government, to amend the Constitution to allow all proposed reforms to go forward. This plan was discarded the very day it was discussed. Undeterred, and at risk of having his reforms ruled unconstitutional by the Court, López Obrador escalated these changes to the highest level of Mexican law.

In terms of climate change policy, the most relevant aspect of this reform is that it attempted to bring back the CFE to its dominant position in the electricity market by reserving 54% of all generation for its plants, which are high GHG emitters[66] (with the exception of a handful of hydroelectric plants and one nuclear plant). Aside from having the largest share of generation, had the proposed constitutional amendment passed, the CFE would have been vertically reintegrated,

“reversing the legal separation of the CFE into affiliate companies (generation, distribution, retail, etc.), as per the 2013 constitutional reform. Having one integrated company would have created entry barriers to other players, as the CFE’s generation facilities would have enjoyed preference for its transmission lines, while leaving lesser capacity to other generators. This would hinder competition in the electricity industry, as no other utility company may be vertically integrated by law, since transmission and distribution lines can only be owned by the CFE.”[67]

Consequently, this additional move toward the domination of the CFE in the market also gives preference to its polluting plants.

The proposed constitutional change faltered and failed to pass the lower chamber of Congress. When discussed, all three leading parties (PRI, PAN, and PRD), plus the MC (Movimiento Ciudadano or Citizens' Movement) formed a legislative coalition and voted against it — handing the president a major political defeat. Still, the legal reform prevailed, causing much dismay within foreign and domestic investment circles.

In many ways, the Supreme Court’s divided vote made possible what could not be done by consensus in Congress. The articles that were left in force as a result of the lack of a qualified Court majority were strong enough to slow down the momentum of private investment. Although the changes have not been applied because of the injunctions awarded to the companies that filed constitutional challenges,[68] the prevailing reforms and stalled generation permits have inhibited new projects. With or without constitutional reform, several generation permits are approaching termination and only a very few have been awarded.[69]

The defeat of the government’s proposed constitutional reform was followed by months of tensions between Mexico, the United States, and Canada. As Tony Payan and Miriam Grunstein recount,

“U.S. climate envoy John Kerry visited Mexico a number of times to raise concerns over the recarbonization of Mexico’s energy industry, which is negatively impacting the country’s commitment to fight global climate change. U.S. Trade Representative Katherine Tai also repeatedly warned Mexico about serious violations to several provisions of the USMCA, and Energy Secretary Jennifer Granholm sought to persuade the López Obrador administration to join into a broader North American energy platform. Meanwhile, Secretary of State Antony Blinken has kept diplomatic channels open, and U.S. Ambassador to Mexico Ken Salazar organized and held meetings between the López Obrador government and at least 17 companies affected by the policy shift.”

Mexico’s response to the summons was initially cool. In his daily press conference, López Obrador said that he would not relent as the rulings minimized Mexico’s right to take action to strengthen Pemex and the CFE as pillars of Mexico’s energy sovereignty.[70] Finally, in July 2022, the U.S. government called for state-to-state consultations, as stipulated by the USMCA.[71] Canada has joined Washington in this effort, and these consultations, charged with resolving four specific complaints brought forth by the U.S. government, should be completed by the end of October 2022.

As of the writing of this report, the aforesaid consultations[72] have been extended twice. On March 27, 2022, it was announced that the Biden administration plans to send Mexico an "act now or else" message to urge the government to award the stalled sun and wind generation permits as well as revert rules contrary to Mexico’s international decarbonization commitments.[73]

Is the Sun Setting on the Sonora Plan?

Although this “ultimatum” may have been predictable, given the lack of agreement reached as a result of these consultations, declarations from the United States and Mexico signaled that both governments understood that a panel would be the very last resort due to the seriousness of its commercial, political, and social consequences. A breakdown of consultations would be harmful to all countries involved.

The willingness to preserve good relations between Mexico and the U.S. have been manifested in a series of acts and declarations, revealing that an ultimatum was near in Biden’s agenda. Back in October 2022, John Kerry held a meeting with López Obrador in the government offices of Hermosillo, Sonora.[74] Soon after, it was announced that agencies of both countries were committed to the same vision on the role renewable energy plays in climate change mitigation. Thus, in their respective jurisdictions, these partners must take the required steps to expand solar, wind, hydroelectric, and geothermal capacity. John Kerry stated he was “impressed” by the development of environmental plans and programs by the Mexican government. He further affirmed that he is certain Mexico is taking advantage of its privileged geographic location and natural resources to abate climate change.[75]

On March 21, 2023, López Obrador announced that John Kerry would return to Mexico to talk about the Sonora Plan. Kerry’s visit to Mexico is timely as President López Obrador had just inaugurated “phase one” of the Sonora Plan, with a goal of creating transmission lines headed toward Baja California by 2024. He further explained that the expansion of the solar plant in Puerto Peñasco, Sonora is necessary, as is the construction of transmission lines between Sonora and Baja California. López Obrador added that Manuel Bartlett of the CFE and other technical staff would be present in the meeting with Kerry to provide details about the Puerto Peñasco plant, which is intended primarily to export solar powered electricity to the U.S. The CFE team would also address the government’s plans to generate wind and solar energy and to modernize its hydroelectric plants.[76]

The outcome of this meeting was announced during the March 27, 2023, press conference. President López Obrador declared that, aside from the Puerto Peñasco plant, the government would develop three others, with an estimated investment of US$5 billion. In this meeting, Mexico committed to generating at least 35% of Mexico’s electricity from renewable sources.[77] As to the role that the United States might play in the materialization of the Sonora Plan, President López Obrador said that Mexico will attempt to provide financial aid, as necessary, at the lowest interest rates possible, even though all infrastructure belongs to the CFE. López Obrador underscored that the Biden administration is aware that the CFE must be strengthened in order to prevent electricity rates from rising.

But will the CFE be strengthened for Mexicans when the Sonora Plan is implemented? One of the main purposes of the plan is to export solar powered electricity from bordering states — such as Baja California and Sonora — to California and Arizona. Thus, part of the plan includes the construction of cross-border transmission lines. The main exporter is expected to be the Puerto Peñasco solar plant which, if finished, will have a generation capacity of 1000 MW. When and if completed, this plant is expected to be the largest in Latin America and the seventh largest in the world with 279,000 solar panels.

In order to preserve its diplomatic relationship with the United States, and to avoid — or postpone — a major legal controversy, the Mexican government appears to have turned green. In its domestic energy policy, however, the horizon looks distinctly shrouded with GHG emissions.

A Final Word: State-to-State Panels Are What Happens While You Are Making Other Plans

It may seem odd that, just a few weeks after Kerry’s amicable visit to Mexico, the Biden administration delivered its ultimatum for Mexico to “straighten up” its energy policy in terms of competition, fair treatment, investment protection, and environmental protection. López Obrador thought he could have it both ways — green outside and grey inside — but he cannot. Even if solar powered electricity exports and electric vehicle nearshoring end up benefiting Biden’s Inflation Reduction Act and his infrastructure bill, upcoming elections leave the Sonora Plan up in the air since neither Biden nor López Obrador may be in power to benefit politically from their plans and policies. In the best of cases, the photovoltaic plants will be operating in 2025. By then, there is no doubt that López Obrador will be out of office. However, at this moment it is difficult to say whether Biden — or another like-minded Democrat — will hold office. If not, only time will tell whether the Inflation Reduction Act and/or the Bipartisan Infrastructure Bill intentions will prevail.

The ephemeral expectations of the Sonora Plan, and the uncertainty of how much it will serve Biden’s climate policy, are not the only reasons why, despite Kerry’s enthusiasm, Mexico has been given an ultimatum to act and straighten out its energy policy. While politicians may be satisfied with the results of these amicable meetings between U.S. and Mexican officials, both U.S. and Canadian companies have invested substantially in projects that will not render profits if permits are not granted. This will likely have an impact on whether López Obrador or his successors are able to sustain a CFE-centered Mexican electric industry.

Finally, the ultimatum notice was followed with a political act that must have caught the attention of Mexico’s commercial partners. On April 7, 2023, Iberdrola (the Spanish power company) and the Mexican government announced that the latter would purchase 13 Iberdrola power plants to be operated by the CFE. Following years of tensions and legal disputes between the company and the Mexican government, Iberdrola agreed to the purchase of 80% of their assets for $US6 billion. Interestingly, what is really an acquisition was called a “nationalization” by President López Obrador and several members of his government, including Marcelo Ebrard and Claudia Sheinbaum.[78] No other word is capable of alarming free market countries, or investors, more than this one. Most likely, “nationalization” was a word used to placate López Obrador’s voters, but the news of its use spread far beyond Mexico’s borders. In the end, it is unlikely that Kerry will return to hail Mexico as an environmental champion. It is way more likely that these two (or three) countries shall meet again — this time as parties to an international arbitration panel.

Endnotes

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[1] See Arturo Carranza, “The Sonora Plan. Clean Energy and Nearshoring,” Mexico Business News February 16, 2023, https://mexicobusiness.news/energy/news/sonora-plan-clean-energy-and-nearshoring. 

[2] Elizabeth Melimopoulos, “How bad could Europe’s energy crisis get this winter?” Al Jazeera, October 4, 2022, https://www.aljazeera.com/news/2022/10/4/how-bad-could-europes-energy-crisis-get-this-winter. 

[3] John Kemp, “US natgas prices slump after mild winter leaves big surplus” Reuters, March 26, 2023, https://www.reuters.com/business/energy/us-natgas-prices-slump-after-mild-winter-leaves-big-surplus-kemp-2023-03-24/. 

[4] IEA (International Energy Agency), “How the European Union can avoid natural gas shortages in 2023,” https://www.iea.org/news/how-the-european-union-can-avoid-natural-gas-shortages-in-2023. 

[5] Ibid.

[6] IEA, “Russia's War on Ukraine: Analysing the impacts of Russia's invasion of Ukraine on global energy markets and international energy security,” https://www.iea.org/topics/russias-war-on-ukraine.  

[7] World Economic Forum, “6 ways Russia's invasion of Ukraine has reshaped the energy world,” November 8, 2022, https://www.weforum.org/agenda/2022/11/russia-ukraine-invasion-global-energy-crisis/. 

[8] “Coal has made a comeback in Germany this year, as Europe's largest economy turns to the dirty fuel to power it through an energy crisis. More than a third (36.3%) of the electricity fed into the German power grids between July and September came from coal-fired power plants, compared with 31.9 percent in the third quarter of 2021, according to German statistics office, Destatis. Long demonised by Germany's Green party, which leads some of the government's top ministries, coal was set to be phased out by 2030, but Russia's war with Ukraine and gas export curbs, brought coal back into favour. Coal-to-power generation output rose by 13.3% year-on-year to 42.9 terawatt hours (TWh) in the three months of July-September, during which overall German power output - at 118.1 TWh - lagged the same period in 2021 by 0.5 percent, Destatis said.” See Vera Eckert and Tom Sims, “Energy crisis fuels coal comeback in Germany,” Reuters, December 16, 2022, https://www.reuters.com/markets/commodities/energy-crisis-fuels-coal-comeback-germany-2022-12-16/. 

[9] United Nations Framework Convention on Climate Change, Conference of the Parties

Twenty-seventh session, Sharm el-Sheikh, November 6-18, 2022, https://unfccc.int/sites/default/files/resource/cp2022_L19_adv.pdf. 

[10] European Commission, “Speech of Frans Timmermans at the COP27 Closing Plenary,” November 20, 2022, https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_7042. 

[11] World Meteorological Organization, “Early Warnings for All Action Plan unveiled at COP27,” November 7, 2022, https://public.wmo.int/en/media/press-release/early-warnings-all-action-plan-unveiled-cop27. 

[12] EIA (U.S. Energy Information Administration), “Oil and Petroleum Products Explained,” November 2, 2022, https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php. 

[13] See “National Climate Task Force,” The White House, https://www.whitehouse.gov/climate/. 

[14] Ibid.

[15] Ibid.

[16] Presidencia de la República, “Roadmap: Key deliverables of the 10th North American Leaders' Summit,” January 11, 2023, https://www.gob.mx/presidencia/prensa/roadmap-key-deliverables-of-the-10th-north-american-leaders-summit-323452?idiom=es. 

[17] Ibid.

[18] Tony Payan and Miriam Grunstein, “What’s up with the USMCA and Mexico’s Energy Policy?” Rice University Baker Institute for Public Policy, Center for the U.S. and Mexico, September 14, 2022, https://www.bakerinstitute.org/research/whats-usmca-and-mexicos-energy-policy. 

[19] Jarrett Renshaw and David Lawder, “Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs,” Reuters, March 27, 2023, https://www.reuters.com/business/energy/us-plans-ultimatum-mexico-energy-dispute-raising-threat-tariffs-2023-03-27/.

[20] Rosanety Barrios mentions that the CFE’s hydroelectric generation amounts to only 33% of its total capacity, whereas the other two-thirds are powered with fossil fuels in “Capacidad de generación total de CFE: mitos y realidades,” Animal Político, México Cómo Vamos, December 9, 2021, https://mexicocomovamos.mx/animal-politico/2021/12/capacidad-de-generacion-total-de-cfe-mitos-y-realidades/. 

[21] Ibid.

[22] United Nations, “Comments of Mexico On Climate Change and Security,” https://www.un.org/esa/dsd/resources/res_pdfs/ga-64/cc-inputs/Mexico_CCIS.pdf.   

[23] Valeria Moy, director of the Mexican Institute of Competitiveness, explains that, as of the beginning of the COVID-19 pandemic in 2020, the percentage of the multidimensional poverty has risen sharply. The latter concept should be construed as the inability to access health services, social security, education, housing, basic services, and a nutritious diet. From the calculation of multidimensional poverty stems another subgroup, that which encompasses extreme multidimensional poverty. This group comprises those persons with such a low income that, even when spent entirely on the acquisition of food, they could not obtain the necessary nutrients for a healthy living.

[24] OECD (Organisation for Economic Co-operation and Development), “Poverty and Climate Change: Reducing the Vulnerability of the Poor through Adaptation,” https://www.oecd.org/env/cc/2502872.pdf. 

[25] United Nations Development Programme, “Climate Change Adaptation: Mexico,” https://www.adaptation-undp.org/explore/mexico. 

[26] Article 47 of the General Law of Climate change establishes an inter-secretarial commission that comprises the participation of 14 agencies such as Environment, Energy, Communications and Transportation and many others. The purpose of the coordination and joint action of these agencies is to design and enforce policies aimed at the mitigation and adaptation to climate change. See http://biblioteca.semarnat.gob.mx/janium/Documentos/Ciga/agenda/PPD02/DO3599.pdf. 

[27] Jesús Aranda, “Calderón firma decreto que promulga la Ley General de Cambio Climático,” La Jornada, June 6, 2012, https://www.jornada.com.mx/2012/06/06/politica/003n1pol. 

[28] Ley Para El Aprovechamiento De Energías Renovables y El Financiamiento De La Transición Energética.

[29] Gustavo Sosa-Nunez and Simone Lucatello, “Analysing Political Discourse: Mexico’s Climate Change Policy,” L'Europe en Formation 380, no. 2 (2016): 76-77.

[30] Ibid.

[31] The specific targets, and their implementation are set forth in transitory articles two and three of The General Law on Climate Change.

[32] Ibid.

[33] José María Lujambio explains that, particularly as of 2010, the CRE began to issue various regulatory incentives. The most important one is a preferential transmission rate, payable to the CFE to deliver electricity to consumers. According to Lujambio, this was an implicit subsidy that was highly attractive to developers and investors in the electric industry. It’s possible this was the principal motive for wind projects materializing in the Tehuantepec region in the state of Oaxaca, which, although it has some of the most powerful currents in Mexico, is a rather remote region with significant power demand. See José María Lujambio, “Historia mínima de los incentivos y obstáculos regulatorios para las energías limpias en México,” El Colegio Nacional, January 2022, https://colnal.mx/wp-content/uploads/2022/01/Nuevas-formas-juri%CC%81dicas-para-la-sustentabilidad_Lujambio_V-Encuentro-Libertad-por-el-Saber_ECN.pdf. 

[34] Transitory article 2 of the General Law of Climate Change contains those target milestones.

[35] According to Lujambio, “the energy bank” is a mechanism by which the CFE virtually stores the renewable energy generated by facilities that wasn’t used by consumers for up to a year. See Lujambio, “Historia mínima de los incentivos y obstáculos regulatorios para las energías limpias en México.”

[36] Sosa-Nunez and Lucatello, “Analysing Political Discourse: Mexico’s Climate Change Policy.”

[37] Ibid.

[38] See Duncan Wood and Jeremy Martin, “Of Paradigm Shifts and Political Conflict: The History of Mexico’s Second Energy Revolution,” in Mexico’s New Energy Reform, ed. Duncan Wood, Wilson Center, October 2018, 17-35, https://bit.ly/3WXFGBq. 

[39] Following the three electric power auctions, the government awarded 42 contracts that should increase generation capacity by 400% since the beginning of the Peña Nieto administration. See Gobierno de México/Secretaría de Energía, “Con la conclusión de 3 Subastas Eléctricas, México cuadriplicará la capacidad solar y eólica que se tenía al inicio de este sexenio: PJC,” press release, November 7, 2008, https://www.gob.mx/sener/prensa/con-la-conclusion-de-3-subastas-electricas-mexico-cuadriplicara-la-capacidad-solar-y-eolica-que-se-tenia-al-inicio-de-este-sexenio-pjc. 

[40] In the “Renewable Energies Outlook, 2017-2031” SENER states, “In Mexico, by the end of 2016, renewable energies increased by 10.17% its installed capacity regarding the previous year. In Mexico, 15.4% of the electricity was generated by renewable energies, i.e., solar and wind power, the technologies with the largest growth.” SENER (Secretariat of Energy), “Renewable Energies Outlook, 2017-2031,” 2017, https://www.gob.mx/cms/uploads/attachment/file/325631/Renewable_Energies_Outlook_2017-2031.pdf. 

[41] Although approved in 2015, Mexico ratified and joined the agreement in September of 2016, as had 29 other countries, including the United States, China, and Brazil, among others that altogether are accountable for 42.6% of the world’s total GHG emissions.

[42] The UNFCCC explains NDCs as follows: “Nationally determined contributions (NDCs) are at the heart of the Paris Agreement and the achievement of its long-term goals. NDCs embody efforts by each country to reduce national emissions and adapt to the impacts of climate change. The Paris Agreement (Article 4, paragraph 2) requires each Party to prepare, communicate and maintain successive nationally determined contributions (NDCs) that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions.” See United Nations Climate Change, “The Paris Agreement and NDCs,” https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs. 

[43] See IEA, “General Law of Climate Change (Mexico),” August 12, 2022, https://www.iea.org/policies/8683-general-law-of-climate-change-mexico.

[44] The law stipulates that by 2018, municipalities of over 50000 inhabitants should develop urban infrastructure that does not emit methane, and, where viable, implement technology for electricity generation via gas (Transitory Article III).

[45] Climate Action Tracker, “Mexico,” 2022, https://climateactiontracker.org/countries/mexico/. 

[46] Gobierno de México, “Mexico announces new commitments to combat climate change at COP27,” Foreign Ministry-Embassy of United States in Mexico, Joint Press Release, November 14, 2022, https://www.gob.mx/sre/prensa/mexico-announces-new-commitments-to-combat-climate-change-at-cop27?idiom=en. 

[47] Ibid.

[48] “Mexico’s new climate plan is worse than its old one, analysts say,” Climate Home News, December 19, 2022, https://www.climatechangenews.com/2022/12/19/mexico-new-climate-plan-worse-than-old-one-analysts-bad/. 

[49] Ibid.

[50] Ibid.

[51] Ibid.

[52] Ibid.

[53] Ibid.

[54] Jonathan Ruiz Torre, “Los ‘ventiladores’ en los que chocarán AMLO y Biden,” El Financiero, November 11, 2020, https://www.elfinanciero.com.mx/opinion/jonathan-ruiz/los-ventiladores-en-los-que-chocaran-amlo-y-biden/. 

[55] Arturo Solís, “CFE es víctima de las tarifas de la CRE: Bartlett,” Forbes, February 25, 2019, https://www.forbes.com.mx/cfe-es-victima-de-las-tarifas-de-la-cre-bartlett/. 

[56] Jon Martin Cullel, “Los pagos de empresas energéticas a la CFE aumentan un 67% con López Obrador,” El País, March 23, 2022, https://elpais.com/mexico/2022-03-24/los-pagos-de-empresas-energeticas-a-la-cfe-aumentan-un-67-con-lopez-obrador.html. 

[57] Edgar Sigler, “Un tribunal suspende el ‘tarifazo’ de CFE a una de empresas renovables amparadas,” Expansión, July 7, 2020, https://expansion.mx/empresas/2020/07/07/un-tribunal-suspende-el-tarifazo-de-cfe-a-una-de-empresas-renovables-amparadas. 

[58] Jesús Carillo, Oscar Ocampo, and Diego Díaz, “El Autoabasto Eléctrico en Datos” Instituto Mexicano para la Competitividad (IMCO),” May 5, 2022, https://imco.org.mx/wp-content/uploads/2022/05/Autoabasto-ele%CC%81ctrico-en-datos_IMCO_05052022.pdf. 

[59] Ibid.

[60] Ibid.

[61] Miriam Grunstein, “When Opposite 'Poles' do not Attract: López Obrador's Path toward Electricity Reform in Mexico,” Rice University’s Baker Institute for Public Policy, Center for the U.S. and Mexico, June 8, 2022, https://doi.org/10.25613/20HK-BW11 . 

[62] Bartlett’s arguments are inconsistent with evidence from international power market prices. With offers as low as $20 per kilowatt-hour, Mexico stands out in Latin America for having the cheapest energy for the CFE. See Grunstein, “When Opposite 'Poles' do not Attract.”

[63] Ibid.

[64] Ibid.

[65] Ibid.

[66] Ibid.

[67] Ibid.

[68] Ibid.

[69] Lourdes Flores, “Usuarios de Iberdrola en Nuevo León tendrán que buscar interconexión con CFE ante vencimiento de contrato,” El Economista, February 23, 2023, https://www.eleconomista.com.mx/estados/Usuarios-de-Iberdrola-en-Nuevo-Leon-tendran-que-buscar-interconexion-con-CFE-ante-vencimiento-de-contrato-20220123-0007.html. 

[70] This term is often used in developing countries and refers mainly to having energy security by the participation of state-controlled entities.

[71] Under USMCA Article 31.4.5, the parties shall enter into consultations within 30 days of the U.S. request, unless the parties decide otherwise. Under USMCA Article 31.6.1, if the parties do not resolve the matter through consultations within 75 days of the U.S. request, the United States may request the establishment of a panel.

[72] Tony Payan and Miriam Grunstein explain, “The four complaints, as articulated by the U.S. government, are as follows: Mexico’s power industry law forces the National Center for Energy Control (CENACE) to give priority to the Federal Electricity Commission (CFE) over other actors — a measure that violates the commitment to equal treatment of all actors in the market; The CFE and the Secretariat of Energy’s many inactions, delays, denials and revocations of private companies’ permits to operate in Mexico go against the commitment to guarantee equal treatment of all market actors; The requirement for Mexico’s oil company, PEMEX, to provide ultra-low-sulfur diesel — a privilege not granted to other companies — was postponed; and Mexico’s exercise of regulatory discretion, through the National Center for Control of Natural Gas (CENAGAS) and the Energy Regulatory Commission (CRE), to give priority in natural gas transportation services to companies that buy directly from the CFE or PEMEX discriminates against companies that have other suppliers but need such services to operate.”

[73] Renshaw and Lawder, “Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs.” 

[74] Alonso Urrutia and Cristina Gómez, “Plan Sonora, modelo a seguir en transición energética: AMLO a Kerry,” La Jornada, October 29, 2022, https://www.jornada.com.mx/notas/2022/10/29/politica/plan-sonora-modelo-a-seguir-en-transicion-energetica-amlo-a-kerry/. 

[75] Ibid.

[76] Urrutia and Gómez, “Plan Sonora, modelo a seguir en transición energética.”

[77] Ibid.

[78] Isabella Cota and Isabella González, “López Obrador moldea una ‘nacionalización’ a su manera con la compra a Iberdrola,” El País, April 10, 2023, https://elpais.com/mexico/2023-04-10/lopez-obrador-moldea-una-nacionalizacion-a-su-manera-con-la-compra-a-iberdrola.html. 

 

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