LNG, the Energy Transition and Mexico’s Global Opportunity

A great deal has been discussed on the global energy transition. So, in the spirit of the recent COP26 meetings and as global leaders meet, and hopefully commit, to zero carbon emissions by 2050, I thought that discussing one of the lesser covered topics would be helpful.

Let’s start with the background. Challenges, of course, are everywhere; energy prices have spiked globally, from oil to natural gas, and better-than-expected surges in global demand have brought about coal consumption increases, and even shortages, which has not been seen in several years. To say the conversation is as important as ever is an understatement. While agreement globally (or mostly) is aligned on where we need to collectively arrive at, there are aspects that need to be covered beyond the sole push in renewables.

Enter LNG. Overall, global growth is expected to continue centered around emerging markets and more specifically Asia, with China and India leading the way. While these countries strive for net zero, and continue pushing for renewables, studies show that to truly move away from carbon many conversions toward natural gas need to occur over the next decade, and the sooner the better. There is no point in assuming a 2050 target if we continue using coal for the next three decades.

By far, LNG is positioned to bridge the gigantic need for investment in renewables that are needed globally, with the shorter term need for coal reductions. The easy path is strong investments in reconversions from coal to natural gas while solidifying the pace of renewables.

Research has shown that an LNG capacity shortfall could surge from 2 percent now to 14 percent in 2030. Being close to one of the largest natural gas reservoirs globally, right across the border, and having access to both the Pacific and Atlantic, Mexico is in an optimal position for LNG export terminals. Pipelines have been built and with the proper regulatory and permitting processes, this could be a great opportunity for Mexico.

Global and renowned players in Asia and Europe need access to cheap natural gas, and they are willing to anchor long-term offtake agreements that could subsequently anchor financing, making projects viable from an economic standpoint.

Let’s push forward the energy transition. Let’s look beyond the long-term objectives and see what can be done now. Finally, let’s aim to position Mexico to capture this vast opportunity.