Between Economic Growth and Sustainability

The development and growth of Mexico’s energy sector needs to go hand-in-hand with the protection of the environment and the social context in which the activity takes place, especially in a territory blessed by nature and which bases a significant part of its GDP on the management of natural resources. With its goal of achieving the objectives set out in the Paris Agreements, Mexico is immersed in an energy transition whose purpose is to find the ideal balance between economic development and sustainability, in addition to complying with the plan to reduce 45 percent of CO2 emissions internationally.
In this context, the regulatory framework and the application of laws, especially this last point, seem essential, in addition to the coexistence of the energy industry with the environment in which it is developed. This is what Victoria Contreras, Director General of Conecta Cultura, a Mexican consultancy dedicated to building bridges between the government, energy companies and the socio-economic environments in which they develop their activity, believes. “An indigenous community can live without the developers’ profit but a developer would not be able to operate without the consent of the indigenous community,” Contreras says. Ricardo Medina, General Director of ADFERI Consultores Ambientales, agrees, especially with the management carried out in this regard by the Safety, Energy and Environment Agency (ASEA). “Under this convention, socio-economic and cultural perspectives are considered as social impacts go hand in hand with environmental assessments.”
However, the application of these standards would be impossible without the implementation of communication channels based on transparency and pedagogy with respect to the inhabitants of the communities where the energy projects will be carried out. “A repeated error made by project developers is to arrive to a community and expect the project to be developed just because they have a permit granted by the government,” says Miguel Montañés, Director of Natura Medio Ambiente. “For a project to materialize, it is all about creating a positive communications channel with communities where both parties can truly be listened to and understood.”
According to the World Resources Institute, Mexico ranks 10th in terms of highest emissions, generating 1.68 percent of all emissions worldwide, hence the importance of an energy transition that puts the country at the forefront of clean and renewable energy. The plan is ambitious, as it represents a radical change of mentality regarding the energy future, as indicated in the Energy Reform implemented during the administration of Enrique Peña Nieto and the Energy Transition Law approved in 2015. Now, the ball is in the court of the private sector, while the application of the rule of law, key to the legal security necessary for the continuity of foreign investment and international competitiveness, continues to fall on the shoulders of the government. “When a company involved in the energy industry wants to start a new project, it is required by law to present a social impact assessment of the project, based on the Ministry of Energy’s guideline,” says Eloy Rodríguez, Director General of Acción Social Empresarial (ACCSE). “Prevention and planning are key to the success of a project where social and environmental responsibility must go hand in hand with this process.”
The Ministry of Energy continues to take steps to achieve the objectives set out in Paris and the Energy Reform, especially when it comes to standardizing processes at an international level. “The Administrative Dispositions on Social Impact Assessments directly responds to the dire need to strictly adhere to international best practices regarding these assessments, standardizing the services of the social consulting sector,” says Marinieves García-Manzano, Founding Partner at GMI Consulting. “Some kinks need to be worked out, such as how to proceed with geothermal projects and their exploration timeline, but in general terms, the level of the provisions is highly satisfactory in addressing the issues that social impact assessments suffered from in the past.”
The path followed by all the segments involved in Mexico’s energy sector has left a halo of optimism over the industry since the beginning of the Energy Reform. But the advancements made in 2018 face uncertainty. President López Obrador incorporated his idea of ​​consolidating the fossil fuel sector in his energy plan for the next six years and suspended the last clean energy auction. Most insiders agree that the future of clean and renewable energy in Mexico is thus facing a watershed that could define the country’s future for decades to come.