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News Article

CFE to Invest in Coal to Back Up Power Production

By Cas Biekmann | Wed, 07/15/2020 - 12:05

CFE will invest over MX$2 billion (US$89.3 million) to obtain 2 million tons of coal from smaller producers in Mexico, as reported by Energía Hoy. The goal of the purchase is to have a reliable basis for energy production in Mexico’s power producing network. While coal was thought by some experts to be too polluting and therefore first to be phased out of the energy mix, global trends show that coal remains resilient.

In a virtual press conference, CFE’s Miguel Alejandro López clarified that the purchase will be completed within the next 18 months. The coal will be used by two power plants located in Coahuila: Río Escondido and Carbón II. Energía a Debate writes that Río Escondido has a capacity of 1.4GW, whereas Carbón II provides 1.2GW. According to CFE data, both plants consume around 11 million tons of coal per year to generate this capacity. The acquisition of the coal is done through support programs of Mexico’s Mining Undersecretariat.

Looking at the numbers, the purchase of 2 million tons of coal is a small one compared to the 11 million tons these two plants are already set to consume. The purchase, therefore, appears to have been done mainly to support smaller and medium coal producers: 73 percent of the coal will be directly sourced from them. Miguel Alejandro López justified CFE’s need for coal by pointing out problematic intermittency coming from Mexico’s other energy resources.

Coal remains a resilient form of energy generation. Despite its well-published negative environmental effects, coal remains a cheap energy resource. Energy generation is also relatively simple to maintain at certain levels, meaning that intermittency is not an issue. These benefits have proven tempting, even as countries aim to phase out its worst pollutants in order to reach the ambitious Paris Agreement’s climate goals. Japan, for instance, is a prolific coal producer. In an attempt to become more climate-friendly, Japan’s government announced it would accelerate the closure of inefficient coal power plants, reports Reuters. Climate activists had long criticized the government’s reliance on coal. But the news is unlikely to satisfy critics, as the govermnent decided to instead build newer, more efficient coal power plants.

The data used in this article was sourced from:  
Energía Hoy, Energía a Debate, Reuters, EIA
Cas Biekmann Cas Biekmann Journalist and Industry Analyst