Natural Gas: Fuel of the Energy Transition
As Mexico has vast untapped natural gas resources, the Mexican Natural Gas Association (AMGN) declared the resource as the fuel for the future, as it can help improve air quality, boost economic growth and promote economic development in the country. However, Mexico’s gas production is not yet up to scratch.
In 2015, Mexico’s government passed the Energy Transition Law (LTE), catalyzing the country’s energy sector in a period of profound change. The law aims to promote the sustainable and efficient use of energy, regulate the obligations of power companies related to their mandatory share of clean energy including natural gas not exceeding 100kg/MWh and push for the reduction of polluting emissions while ensuring the competitiveness of the clean power sector within the Wholesale Electricity Market (WEM).
In other words, the law contains goals and mechanisms for the incorporation of renewable power into the grid. Since Mexico is one of the countries suffering the effects of climate change, the country must undergo a clean energy transition.
José García Sanleandro, President, AMGN declared natural gas to be the fuel of energy transition in an Energy Year interview in March 2022. Many energy industry insiders share his view as natural gas is one of the mainstays of the global energy mix. Compared to more polluting fossil fuels, it improves air quality and limits carbon emissions. “It is the best fuel to be used in parallel with renewable energy as it represents a reduction of about 50% compared to other energy sources such as coal, and 30% less compared to liquid fuels,” said García while comparing harmful emissions.
Natural gas is the key element to meet social needs, boost economic growth and promote human development in Mexico. “Natural gas is a fuel that provides businesses with competitiveness, boosts economic development and [leads to] job creation in the region,” he added.
Monterrey was one of the first cities where the AMGN encouraged the use of natural gas, followed by Mexico City, Jalisco, Coahuila and Tamaulipas.
Since 2015, Mexico has been successful in halving its dependency on coal but it still has a long way to go. Rosa Prol Ledesma, President, the Geology Specialization Commission, told Mexico Business News in 2022 that the country ranks 50th on an energy transition ranking of 115 countries. This is partially because Mexico has vast untapped natural gas resources even though it lacks the production capacity to capitalize on these assets.
For the moment natural gas is crucial in the transition. However, looking toward the future, Ramon Moreno, CEO, Mitsui & Co. Power Americas recognizes the contribution of natural gas coming to an end as fully renewable energy sources will begin to dominate the energy matrix. He therefore encourages industry leaders to look at green hydrogen as the next evolutionary step for the gas sector.