G7 to Invest US$600 Billion in Clean Energy Economy Action Plan
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G7 to Invest US$600 Billion in Clean Energy Economy Action Plan

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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Wed, 05/31/2023 - 14:34

G7 nations will invest US$600 billion to develop the Clean Energy Economy Action Plan. Meanwhile, the IEA reveals that clean energy investments will surpass those of oil production in the near future. 

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G7 Announces Decarbonization Investments

G7 nations will invest US$600 billion over the next four years to drive an action plan focused on decarbonizing economies and promoting nearshoring initiatives. The goal is to move beyond nationalist narratives and foster a globalized approach that encourages collaboration among nations to tackle climate challenges, collectively. G7 countries also emphasized the need for clear and transparent rules to govern the energy sector and promote competitive, open and transparent energy markets. 

G7 Pledges US$600 Billion to Hit Net-Zero. What Will Mexico Do?

Leonardo Beltrán, Visiting Fellow, Center on Global Energy Policy at Columbia University, talks about the recently launched Clean Energy Economy Action Plan developed by the G7 countries. According to Beltrán, Mexico should explore the possibility of joining this partnership to attract the investments required in critical minerals, such as lithium. To do so, however, the country needs to align its energy, mining and trade policies to international best practices. 

Clean Energy Investment to Surpass Fossil Fuels

The International Energy Agency published this year's edition of the World Energy Report, which reveals that clean energy is on the brink of a major breakthrough, with global investment projected to reach US$1.7 trillion in 2023, surpassing oil production for the first time in history. Solar energy takes the lead in this renewable revolution, as low-emissions electricity technologies are anticipated to account for nearly 90% of investment in power generation. Furthermore, electric vehicle sales are expected to soar by one-third this year, building on the remarkable surge experienced in 2022.

Controversy Over Combined Cycle in CELs

CRE issued an agreement that sparked controversy regarding green energy, as it categorizes natural gas generation in combined-cycle power plants as fuel-free energy, thereby approving it for Clean Energy Certificates. While proponents of the decision argue that natural gas is a relatively cleaner fossil fuel option compared to coal or oil, critics believe that it should not be equated with truly renewable energy sources, such as solar and wind power.

Adjustment of Clean Energy Regulations Will Be Taken to Court

Environmental NGOs and renewable energy companies will file an amparo to annul CRE’s adjustments to clean energy regulations. The Mexican Solar Energy Association and the Mexican Wind Energy Association raised objections claiming that these modifications may not accurately reflect the true carbon footprint associated with such generation methods. Moreover, NGOs warned about the effects of CRE’s decision on Mexico’s energy transition and demanded the federal government to reverse the measures taken by the commission. In 2020 and 2021, civil associations managed to backtrack two similar agreements under the argument of the human right to health. 

Accountability and Consequences

Santiago Fabián Arroyo, Energy Director, Ursus, outlines the situation revolving around energy policy in Mexico. Since 2019, CRE’s policies have favored state-owned energy companies at the expense of private sector competitors, leading to legal disputes and challenges in federal courts. Arroyo pointed out that a more flexible approach by CRE and its officials could help mitigate the situation and avoid catastrophic scenarios, while emphasizing the importance of considering the responsibility of public officials and the consequences of their actions.

The Greenest Energy Is Also Good for Your Bottom Line

Gonzálo Azcárraga, Managing Director, Sener Energía in Mexico, stresses that companies can obtain significant savings by reducing their energy consumption and adopting sustainable practices. According to the director, this can also help companies improve their reputation and increase customer and employee loyalty. “By reducing energy consumption, companies can improve their sustainability and help protect the environment for future generations,” writes Azcárraga. 

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