Mexico Boasts Lowest Energy InflationBy María José Goytia | Wed, 05/11/2022 - 14:55
Mexico presents the lowest inflation in energy prices between member of the OECD. Meanwhile, the US Senate condemns Mexico’s energy policy and moves forward with legislative action against it. Furthermore, geothermal energy gains political support.
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Rising inflation continues to rattle the international economy. Recent data published by the Organization for Economic Cooperation and Development (OECD) shows its member-states continue to grapple with the issue. However, because of strong government’s subsidies, Mexico performed as the country with the lowest energy inflation in March 2022 among the 38 members of the organization.
The US Senate unanimously condemned President López Obrador's energy policy, which they argue moves against US companies. The motion opens the door for the US to take legislative action against Mexico. The Senate's position also increases the pressure on President Joe Biden to take decisive action on the mounting commercial conflict. The Motion to Instruct Conferees was promoted by a Republican party Senator from Louisiana, Bill Cassidy. If included in the final US Innovation and Competition Act (USICA), the US could call Mexico under consultation for violating the USMCA via its controversial energy policy.
The Senate has asked the National Water Commission (CONAGUA), the Ministry of Energy (SENER) and CFE to deliver a report on the guidelines, policies, project plans, programs and other general provisions regarding the exploration and extraction of water for power production, which can be based on geothermal or hydroelectric energy. Earlier this week, Senate members approved the decision, noting that especially geothermal projects will be fundamental in the transition to clean energy sources.
In 2018, Mexico topped the list of countries with the highest-valued wind industry, with an overwhelming worth of US$1.06 billion. Since that moment in time, however, the roll-out of wind capacity has continued to slow down to a grinding halt. Defying this unpromising outlook, Tamaulipas’ Minister of Economic Development revealed that investors could finance up to US$2 billion toward the construction of wind farms in the Northeastern state.
Mexico’s solar-based distributed generation (DG) contracts have grown explosively during the past 10 years. Official figures from the Energy Regulatory Commission (CRE) show that DG went from merely one project to 1,396MW installed via scores of contracts. The National Solar Energy Association (ANES) said this trend is mainly driven by the fact that solar systems can decrease energy costs by 60 percent.
The European Union (EU) needs legal certainty to continue promoting investments in Mexico, said EU Ambassador to Mexico Gautier Mignot. He affirmed that Mexico must respect agreements so that European investors gain certainty and security. Mignot placed special emphasis on the energy market, in which European companies invested US$13 billion.