Mexico Reassures Commitment to Clean EnergyBy María José Goytia | Wed, 06/15/2022 - 13:52
During his fourth visit to Mexico, John Kerry agreed with the Mexican government to accelerate the country’s transition towards cleaner energy user. Meanwhile, Mexico Evalúa’s latest study shows that PEMEX and CFE are on a severe risk threshold regarding ESG criteria. Furthermore, electricity inflation reaches the highest levels of the past 12 years.
Ready for more? Here is the Week in Energy!
President López Obrador and the US Special Presidential Envoy for Climate John Kerry agreed to accelerate Mexico’s clean energy production. The agreement comes prior to the multilateral dialogue at the Major Economies Forum on Energy and Climate. Among the commitments to be announced by the Mexican government at the summit are CFE’s bigger focus on solar energy by CFE, as the company will work together with the private sector to accomplish this goal. This is the fourth time Kerry visits Mexico in 2022 so far.
A study conducted by think tank México Evalúa shows that in 2022, PEMEX and CFE are at severe risk regarding ESG guidelines, scoring 64.1 and 57.5 points, respectively. The two companies still above the mark for severe risk, which is rated with 40 points. Although compliance with ESG criteria is not mandatory as a financial accounting standard, the sustainability of companies is increasingly considered by investors.
Iberdrola requested an injunction against another CRE resolution, which denied the modification of a generation permit to a plant located in Queretaro. The injunction was filed days after the CRE decided to impose the most expensive fine in the history of the Mexican energy sector on Iberdrola in Mexico, the reason being the illegal sale of electricity under self-supply contracts.
According to the National Consumer Price Index (INPC), the increase in the price of electricity for May 2022 was of 8.84 percent year-over-year, its highest yearly rise since July 2010, when it reached 9.67 percent. The price increase in electricity comes as a direct consequence of the rise on natural gas prices caused by Russia’s invasion of Ukraine. To satisfy European demand, Texas increased its exports to the EU, meaning a lower availability of US gas and pushed prices up. Mexico produces more than 60 percent of its electricity through natural gas, 70 percent of which is imported from the US.
In May, CRE announced that it would fine the Nuevo Leon-based arm of Iberdrola with US$466 million for carrying out self-supply practices based on illegal contracts via its power plant Dulces Nombres. Two weeks later, President López Obrador confirmed that the fine will be sustained. The fine occurred after the Supreme Court reactivated the 2021 reform to the Electricity Industry Law (LIE), where allows CRE to revise self-supply contracts and deem them illegal if they are found to be deficient.
Since 2008, Enel Green Power has promoted renewable energy development in Mexico, focusing not only on supplying clean energy solutions but also on offering tailor-made alternatives to the more polluting standard electricity options.
Scania recently revealed its newest business line, focused on developing marine and industrial power generation engines to supply the domestic market and help feed Mexico’s country's electric energy demand.
President López Obrador recently suggested that US firm New Fortress Energy is considering several investments in Mexico’s energy sector, which could add up to US$3 billion. At a time when natural gas prices grow rapidly every day, the possible new influx of capital could help strengthen Mexico’s global economic position regarding natural gas and its use.