What will Mexican energy policy look like under the first female president?

Mexico’s energy policy has been widely criticized in recent years, as the country’s president, Andres Manuel Lopez Obrador (AMLO), has continued to fervently support the oil and gas industry over renewable alternatives, while state oil company Pemex has become increasingly indebted. There is now considerable speculation about what lies ahead for Mexico’s energy sector under AMLO’s Morena party successor Claudia Sheinbaum. Claudia has mainly promised to follow the policies of her predecessor, but many hope for a change in energy policy that is rooted in her background as a climate scientist.

Claudia Sheinbaum will become Mexico’s first female president in October this year, after winning the elections in June. Sheinbaum has an extensive academic background, with a PhD in energy engineering from the National Autonomous University of Mexico, with experience as Minister of the Environment for Mexico City in 2000, and was also part of the UN panel of climate scientists that was awarded the Nobel Peace Prize 2007.

During her time as mayor of Mexico City, she implemented innovative energy projects such as the electrification of the city’s bus fleet and the development of a major rooftop solar project at the Central de Abastos wholesale market. Her track record gives hope to many energy experts who see great potential in the future of Mexico’s renewable energy sector.

During her presidential campaign, Sheinbaum pledged to invest $13.6 billion in renewable energy, including wind and solar farms and hydropower. She hopes to boost renewable energy production by as much as 50 percent by the end of her term in 2030. However, she also stated her intention to support Pemex and keep it under state control, signaling an ongoing commitment to national oil and gas. The incumbent president will face difficult decisions when it comes to energy in the coming years.

Although Mexico has deep historical ties to its oil industry, Pemex has become increasingly indebted in recent years. Last year, Fitch Solutions labeled it as the biggest liquidity and debt problem among its Latin American peers. Furthermore, Pemex has been repeatedly criticized for failing to improve its health and safety standards following several major incidents in recent years.

Meanwhile, Mexico’s renewable energy industry is extremely underdeveloped, despite having significant potential. According to the U.S. Department of Energy, Mexico has the potential to generate 24,918 GW of solar photovoltaic energy, 3,669 GW of wind energy, 2.5 GW of conventional geothermal energy and 1.2 GW of hydropower. Several parts of Mexico are currently experiencing the direct effects of climate change. Mexico City is facing a major water shortage, which threatens the city’s drinking water supply, while other parts of the country are experiencing rising temperatures and severe drought. This shows the need for more climate action through a green transition.

Mexico signed the Paris Agreement under former President Peña Nieto and has since made several ambitious climate pledges. In 2022, Marcelo Ebrard, Mexico’s former foreign minister, pledged to reduce greenhouse gas emissions by 35 percent by the end of the decade at COP27, a significant increase from the previous 22 percent reduction target. Meanwhile, Mexico’s energy transition law aims for 35 percent renewable electricity generation by 2024.

However, President AMLO has done little to achieve these goals during his time in government. AMLO has spent billions over the past six years to keep Pemex afloat, while little money was spent expanding Mexico’s renewable energy sector. According to the Climate Change Performance Index, Mexico’s record on climate change policy has deteriorated under AMLO’s leadership, mainly due to higher fossil fuel subsidies and little progress in reducing deforestation.

While there is optimism about Sheinbaum’s future management of the energy sector, she faces significant challenges in bringing about change. It is facing the largest budget deficit in decades and must carefully choose where to spend public funds. Meanwhile, despite its poor performance, Pemex continues to contribute to Mexican state revenues. In 2022, Mexico produced an average of 1.6 billion barrels of crude oil per day, making it the eleventh largest oil producer in the world. Furthermore, ALMO has spent several years accelerating the shift from private energy financing to the nationalization of the country’s energy resources, which has resulted in reduced interest from private investors in the sector.

While Sheinbaum faces a wide range of challenges in steering Mexico’s energy industry in a different direction, there is enormous potential for expanding the country’s renewable energy industry, as well as greater cooperation with other global powers . For example, according to Sheila Jasanoff, a professor of science and technology studies at the Harvard Kennedy School, Sheinbaum’s international climate experience could make her “a very valuable ally for a second Biden administration” if President Biden is re-elected in the coming years. elections.

She could also help Mexico take a leading role in global climate action by developing the country into a major renewable energy hub in the Americas. Only time will tell whether Sheinbaum is committed to overcoming the challenges in the Mexican energy market, diversifying the energy mix and thereby strengthening energy security.

By Felicity Bradstock for Oilprice.com

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