Mexico’s Defaults on COP Energy Commitment

Mexico’s energy transition commitment to generate 35 percent of the nation’s energy with renewable technologies by 2024 falls six years behind schedule according to an updated report by the National Commission for Regulatory Improvement (CONAMER).

Accounting for the country’s unmet targets established in 2015, the amended report pushes back the objective’s deadline to 2030, roughly one month before the COP 26 UN Climate Change Conference. This is evidenced in a government report which recognized that Mexico has yet to bridge a 3.2 percentage point gap to meet 30 percent renewable energy generation by the end of 2021. According to Oscar Ocampo, Energy Coordinator of the Mexican Institute for Competitiveness (IMCO) this delay is consistent with the country’s trajectory which has not had a “change of course that would allow us to think that Mexico [was] going to meet its goals,” he said.

This observation is consistent with investor sentiment which have repeatedly citied the country’s volatile regulatory environment of the past three years for their measured participation. Although the federal government has not been able to change the legal framework, they have successfully paralyzed the sector with the promotion of state-centered policies such as leaving the private sector last for energy dispatch or prompting the Energy Regulatory Commission (CRE) to stop granting permits or concessions to individuals of the private sector.

Ultimately, this has resulted the demotion of Mexico’s rank within EY’s 2021 Renewable Energy Country Attractiveness Index whom previously stood in 7th place during the middle of the previous administration. Now it finds itself in 33rd place out of 40 countries analyzed. Had it not been for Mexico’s globally competitive radiation and wind power generation capabilities, which are foundational to the study’s methodology, the country would have received a lower ranking said Alfredo Alvarez, partner at EY.

Lamenting the country’s current predicament, he reflected on how Mexico had formerly been one of the most attractive countries to invest in, which at one point generated some of the cheapest energy prices, “but this has collapsed” he said. Even though this predicament was predictable, its timing could not have been worse, to be seen is how this will impact the country’s energy consumers, the economy, and weather events.