The International Green Energy Challenge

All countries around the globe face the challenge of moving away from traditional sources of energy, which in some economies are large-scale and important employers. Countries have been dependent upon these sources for many years. These “carbon based” fuels include traditional coal and oil and gas, through to newer sources such as biomass, biomethane, biofuels and refuse-derived fuels (RDF). In Mexico, energy needs are met through a variety of means — gas imports from either the US or liquified natural gas imported into terminals such as Manzanillo, and the increasing roll out of biomass/biofuels. However, the challenge as outlined in the COP Paris Agreement  is not only to reduce carbon emissions, but to achieve zero emissions and, ideally, remove existing carbon dioxide from the atmosphere while providing energy security and job opportunities.

How to Manage an Energy Transition

In implementing such change, concerns can arise and lead to a substantial strategic direction rethink. In the UK, there was a heavy historical reliance on gas and coal for energy. Now, however, wind power makes up greater than 50 percent of the UK’s energy needs. This switch has taken several years and required not only the establishment of supply chains that are robust enough to deliver, but also skills, products and services in addition to changes in the regulation, consenting, etc., to create a different energy and operating environment. In transitioning, countries find themselves at different points along the journey, and have different contexts to contend with. There are, however, some common elements. The UK’s journey involved managing challenges of employment, closure of traditional producers, and creating the environment and structures to facilitate the transition. Key to our approach was considering the “energy” market holistically, including the various providers and technologies. For the UK evaluation, there were three key aspects to align and optimise: Generation, Storage and Distribution.

• Generation mix is important, particularly when implementing large-scale green energy production (either large-scale centralized or decentralized provision).
• Storage for energy balancing, smoothing the peaks and troughs of supply and demand.
• Distributiondelivering of stable and secure energy, to end users, current and future. In the UK, we are fortunate to be a) a small country and b) have a comprehensive grid system. However, in the UK coverage is not fully aligned to the changing demographic of increasing decentralization of users as the grid was established for large-scale heavy energy-consuming industries.

How Can the Energy Transition Create Opportunities?

Transitioning has created new opportunities, not only for domestic jobs and developing new skills and capabilities for the UK workforce, but also export potential for UK expertise. The UK government’s 10-Point Plan for a Green Industrial Revolution mobilizes £12 billion of government investment, and potentially three times as much from the private sector, creating/supporting up to 250,000 green jobs. As more countries transition to clean growth models, those countries that have moved earlier are finding that the opportunities to export are growing and becoming more accessible. Over $1 billion of climate finance has already been spent on low-carbon sectors in the LATAC region since 2010 on a range of projects to support energy transitions, prevent deforestation, develop new technologies, and improve regulation. The IFC estimates the region’s climate smart investment potential is over $2.6 trillion by 2026.

There are other spin-offs in technological development, digital services, new industries such as hydrogen production, products and services, vehicle to grid (V2G) energy balancing, etc. These are trends seen in the UK and more directly in the Northern Powerhouse in Northern England. The region previously servicing the oil and gas sector for many decades is now pivoting to embrace the transition. UK companies are succeeding in playing a role in bringing know-how and products to the fore to achieve this ambition — responding to climate change and developing ways to grow economies and creating jobs for our communities, sustainably, while achieving net zero.

The UK remains committed as an international leader for climate action, allied to a strong private sector in renewable energy products, services, and finance to join national efforts in the ambition to mitigate/adapt to climate change and sustainable prosperity.

Through the UK government’s prosperity programs and our program for Partnering for Accelerated Climate Transitions (UK PACT), the UK supports initiatives in the region — developing offshore wind and hydrogen projects, industry energy efficiency, and urban planning and mobility. The Department of International Trade in Latin America and Caribbean is engaging both the public and private sectors in supporting energy transition across the region and building on the new trade relationship with Mexico for a sustainable green future, post COVID-19, strengthening our commercial and investment links.

Any Mexican businesses looking for UK expertise or potential commercial partnership can contact us here.