Mexico Energy Policy to Align with Sustainable Development Goals

The new administration is slowly unveiling its plan for a new energy model and sustainability is key to develop future projects and plans. Abel Hibert, Economic Adviser to President Lopez Obrador discussed the administration’s plans to follow the UN Sustainable Development Goals to develop a more sustainable energy mix in his keynote speech at Mexico Energy Forum, which took place on Feb. 20 at the Sheraton Maria Isabel hotel in Mexico City.

After the cancelation of the electricity auctions, uncertainty has fluctuated throughout the Mexican energy sector, as players wait for the government to communicate the energy policy for the next six years. Hibert explained that the Ministry of Energy, along with the Presidential Cabinet and the Ministry of Finance are working toward the 2030 Agenda and how the industry will accomplish the UN Sustainable Development Goals (SDGs).

The current status of the Mexican energy sector has a growing demand and need for the diversification of the country’s energy model. “There is an increase in energy consumption in the world and fossil fuels are running out. 21 percent of the electricity in Mexico is currently generated by clean energy, representing 30 percent of the installed capacity,” he said. “One of the main challenges Mexico faces is that many families do not have enough income to pay electricity bills.”

Energy consumption is growing in Mexico at a 3 percent annual rate and between 2015 and 2017, the sector received US$18.6 billion in foreign investment through three energy tenders. “In terms of natural gas, the rise in demand has led to a dependency on the importation of natural gas. At the moment, 84 percent of natural gas is imported, of which most comes for the US. Most countries do not import more than 52 percent of their natural gas and especially do not depend on one sole country like Mexico does on the US,” explained Hibert.

As 62 percent of electricity is currently generated through the natural gas, Mexico is one of the countries with the highest dependency in natural gas, ultimately leading to electric generation. Hibert explained that other countries have a more diversified and less risky energy mix. “Mexico will have to have investment from the private sector because PEMEX will not have the capacity to support such high demands.”

To further consolidate Mexico’s energy sector, the administration plans to implement a Smart Grid that will optimize the distribution of electricity in a more efficient manner, establish a storage market that will provide service to the entire supply chain and increase the promotion of renewable energy, as well as the issuance of CELs. “The government administration sees great opportunity in increasing energy production and securing the country’s energy supply. In the next six years the investment and contracts carried out by PEMEX will help consolidate the energy sector, as well as the investments obtained through the various exploration tenders by petroleum companies,” said Hibert.

The administration is currently carrying out work sessions with industry experts to evaluate projects and the new energy model for years to come, keeping in mind the SDGs. “The Ministries and President are taking time to evaluate and fully understand the best alternatives and solutions for the Mexican industry. We are in a stage of evaluation. These work groups are necessary to make better decisions and fully understand all of the impacts all scenarios will have,” said Hibert.