Mexico’s Energy Shift: From CNG to Biomethane

Q: How have your operations evolved over the years regarding natural gas infrastructure, and how has your reach expanded to cover more locations across Mexico?

A: Although natural gas has existed in Mexico for decades, when we began operations in 2011, many products and services were still undeveloped. At that time, road transportation of natural gas was virtually absent, and the vehicular segment, particularly Natural Gas for Vehicles (NGV), was just beginning.

We focused on raising awareness among entrepreneurs and collaborated with early adopters to install the country’s first CNG stations for industrial and transportation uses. Since then, our growth has been driven by continuous innovation and stakeholder education. We partnered with industry associations and regulatory bodies such as CRE, ASEA, and local authorities to develop frameworks aligned with new technologies and business models.

Over the past 14 years, we have expanded into regions where natural gas was known but not widely applied. Rather than building brand recognition in an established market, we had to foster trust and understanding from the ground up, both among users and regulators.

Q: Could you elaborate on compressed natural gas (CNG) and Natural Gas for Vehicles (NGV) products at Promotora Energética?

A: NGV has become an important transitional fuel. To support its adoption, we helped found the Mexican Association of Compressed Vehicular Natural Gas (AMGNV), creating a network of equipment providers, service operators, certified workshops and related services.

We started by targeting the taxicab sector due to its high fuel consumption and ease of conversion from gasoline. We then expanded into public transport, including buses, which presented greater technical challenges because most run on diesel and required more complex adaptations. We also addressed mid-sized urban vehicles like vans by developing infrastructure in strategic areas.

In recent years, interest from the heavy-duty transport sector has increased. Tractor trucks benefit significantly from fuel cost savings, as diesel prices remain around MX$25/L while natural gas ranges from MX$10/L to MX$13/L. Each segment requires specific infrastructure: taxicab stations are centrally located, while stations for trucks and buses are located near city borders or transport hubs.

For industrial users, we developed “virtual pipelines” that compress natural gas at transfer centers and transport it by truck. Since no formal regulation existed for this model at first, we worked closely with the authorities to establish new permitting rules. Former standards, such as the now-repealed SENER Norm 010, have since evolved to include industrial compression and mobile delivery systems. This process continues as the market and technologies progress.

Q: What opportunities do you see in this sector, both in terms of market demand and regulatory developments?

A: The sector currently faces what I call a “second tsunami,” more precisely, a second regulatory pause. Following the COVID-19 pandemic, projects stalled as offices closed and permits stopped being issued. While reactivation began in 2022 and 2023, momentum has only recently picked up in 2024.

However, at the end of last year, uncertainty arose due to organizational changes that resulted from the elimination of the Energy Regulatory Commission (C.R.E.) and its replacement with the creation of the new National Energy Commission (C.N.E.), completely halting the sector's operations and growth. Investors are hesitant, often saying they will wait to see how new regulatory bodies evolve before committing capital. Given that natural gas infrastructure projects require multimillion-dollar investments, ranging from half a million to tens of millions of dollars, this pause freezes progress.

Regulatory uncertainty affects not only natural gas but the entire energy sector, including power generation, LPG, and gasoline, as no one wants to invest without regulatory clarity. The recent announcement of the new National Energy Commission’s operational launch is positive, but the six-month inactivity period had a significant impact on the industry.

Q: What are your views regarding biogas development?

A: The sector still faces challenges due to regulatory gaps and uncertainty. However, in the case of biogas, the outlook is very encouraging. There is growing recognition of biofuels as a strategic opportunity, and concrete progress is being made to support their development.

Regulatory reforms are moving in a favorable direction, creating opportunities across multiple sources. Waste disposals, Agricultural residues, livestock manure, and wastewater can all be converted into biogas. With the right technology, this biogas can be refined into biomethane. Both biomethane and captured carbon dioxide have valuable commercial applications.

Biomethane can be compressed or injected into existing pipelines. For this reason, we emphasize pipeline injection as a way to ensure efficient distribution to end users. Achieving this will require regulatory adjustments, including possible amendments to the Hydrocarbons Law. Still, compressed biomethane can also be transported by truck, offering flexibility in distribution.

A key development is the shift toward a centralized permitting model under the National Energy Commission. This single-window system would coordinate with environmental authorities such as SEMARNAT, streamlining what are currently very complex processes. For example, permits for compressed natural gas stations can involve more than 140 separate requirements.

Fortunately, as President Sheinbaum has noted, there is a clear push from SENER to reduce bureaucracy and accelerate project approvals. The main challenge now is ensuring these reforms are implemented efficiently and consistently.

Q: What are the main strategic priorities for Promotora Energética this year?

A: Promotora Energética has evolved from a company focused solely on natural gas to a broader player in the energy sector. Our main strategic priorities now center around developing biomethane and bio-CO2 projects. Although these technologies are gaining attention, few projects have moved forward due to high technological costs and limited market familiarity, even though the raw materials are readily available.

We are also exploring opportunities in power generation. After a period of limited investment in the energy sector, the government is now encouraging new developments. It is possible to invest in small-scale generation projects of up to 700 kW without major permitting hurdles, and isolated systems of up to 20MW, which do require permits but remain attractive.

These two pillars, biomethane production and electricity generation, define our strategy. We bring strong technical capabilities and remain active in biogas forums to stay at the forefront of this emerging industry.

Q: What is your overall outlook on Mexico’s energy sector and your company’s role in it?

A: Despite the pandemic and regulatory hurdles, we remain confident in Mexico’s energy future and the vision of its authorities. We view current adjustments as essential steps toward a more dynamic and resilient sector. Promotora Energética is committed to partnering with local and international stakeholders to develop innovative energy solutions that benefit the entire country.

Our focus is on sustainable, long-term growth, and we are proud to contribute actively to Mexico’s energy transition.

Promotora Energética E3 is a company dedicated to the promotion and comprehensive development in Mexico and Latin America of projects in vehicular natural gas (NGV), virtual gas pipelines, LNG and biogas.