Mexico Navigates Energy Policy Shifts Amid Global Trends

Mexico’s energy sector has undergone significant regulatory and policy shifts over the past decade. From President Peña Nieto’s landmark reform that opened energy generation and ownership to private actors, to President Andrés Manuel López Obrador’s more nationalist approach aimed at reasserting state control, the landscape has continued to evolve. Under President Claudia Sheinbaum, the country is now entering a new phase marked by a more pragmatic balance between public and private collaboration. While contracts are increasingly mixed and generation opportunities for private players are more accessible than during the previous administration, Mexico’s regulatory framework is still transitioning, and gaps remain in several key areas.

The International Energy Agency’s updated Global Energy Policies Hub offers a useful lens for evaluating Mexico’s position in the global energy policy landscape. The platform compiles over 5,000 policies from more than 85 countries, tracking more than 50 key policy types, including regulations, performance standards, government spending, and trade rules. While it does not capture every nuance of national frameworks, the Hub provides a valuable snapshot of broader trends, especially across IEA and G20 member countries, highlighting how nations are managing their energy transitions.

In the building sector, North America as a whole, including Mexico, has implemented key regulations such as energy codes for new buildings, F-gas rules, and minimum energy performance standards (MEPS) for air conditioners. All three countries also have government spending in place to support cleaner technologies. However, Canada leads the way with bans on oil and gas boilers, while both Canada and the United States offer additional government support for energy-efficient buildings.

For industry, Mexico, the United States, and Canada all have strategic energy plans, MEPS, and government support for efficiency and recycling. These policies form a solid foundation for decarbonizing the industrial sector across the continent.

On fuel-related policies, Mexico stands out in Latin America. It is one of only two countries in the region, along with Peru, implementing both demand-specific and general gas emergency plans. Mexico also maintains a gas stockholding obligation with strategic reserves and an industrial oil stockholding obligation, a distinction that sets it apart not only from its regional peers but also from other North American countries. However, the country falls behind when it comes to emerging technologies like biofuels, hydrogen, and carbon capture, utilization and storage (CCUS), where it lacks any significant government investment policies.

In power sector policy, North America shows strong alignment. Mexico, Canada, and the United States all support low-carbon electricity and electricity networks through public spending. Notably, Mexico leads in carbon pricing, being the only country in the Americas with both a carbon tax and an Emissions Trading System in place. However, Mexico lags in areas like energy storage. Only the United States has government-backed regulations for batteries and thermal storage.

On just transition policies, Mexico and the rest of North America trail behind several Latin American countries. Mexico lacks government spending initiatives for energy access, such as clean cooking and rural electrification, while countries like Costa Rica and Ecuador have recently announced such plans. It also has no policies for just transition planning or workforce retraining, unlike the United States and Canada. That said, Mexico does join regional leaders like Argentina, Brazil, Chile, Colombia, and Peru in offering energy affordability support for consumers.

According to Fernando Cruz, a legal and regulatory energy expert, the Mexican energy sector is defined by “big opportunities” as well as “big challenges.” The opportunities, he explains, stem in part from the lingering effects of the 2013 energy reform, which “bore certain fruits and allowed for some investment dynamism.” That period helped open the door to private participation and created structures that, despite later regulatory shifts, still enable some degree of project development today.

Yet, Cruz points out that the regulatory environment has since changed dramatically. “Today, private participation is the exception,” he says. The framework now prioritizes state-owned companies like CFE and PEMEX, which limits the flexibility and speed with which the private sector can respond to rising energy demand. Still, demand remains a powerful driver. “Our level of energy supply growth between now and 2050 is expected to remain strong,” he says. “So there is both the need and the certainty that this energy demand must be met.”

Juan Pablo Sáenz, Energy Market Analyst and Consultant, underscores that Mexico is in the process of redefining its electricity market architecture. “The Mexican government is reshaping the electricity market to secure state rectory and planning,” he says. According to Sáenz, the new model attempts to strike a balance between economic merit-based dispatch, which keeps prices competitive, and broader policy goals like energy reliability and decarbonization. The challenge, he notes, is that “these goals do not always pull in the same direction.”

Key to achieving both reliability and sustainability, Sáenz argues, is the integration of technologies like battery energy storage systems (BESS). “Energy must be affordable, clean, and reliable,” he says. Storage allows renewable generation to be more flexible and dependable, while also helping to reduce congestion in overstretched transmission corridors.