US Associations Urge Action Against Mexico's Energy Policy
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US Associations Urge Action Against Mexico's Energy Policy

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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Wed, 03/15/2023 - 14:25

Among this week’s top stories, US energy business associations called on President Biden to push Mexico so that it meets its obligations under the USMCA treaty. Meanwhile, New Fortress can now generate electricity at two of its power plants in Tamaulipas.

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US Energy Associations Urge Biden to Pressure Mexico

On March 10, 2023, the American Petroleum Institute, the American Clean Power Association and the National Association of Manufacturers issued a letter to Katherine Tai, the US Trade Representative, alleging that Mexico failed to engage constructively in consultations that started in mid-2022. The letter aims to urge US President Joe Biden to pressure Mexico to address complaints about its purported nationalist energy policy. 

CRE Grants New Fortress Permits for Tamaulipas Power Plants

In February 2023, regulator CRE granted New Fortress Energy two permits for electricity generation. With these permits, the energy company can now generate electricity at two of its power plants, one powered by natural gas and the other by diesel, in Tamaulipas. The power plants will have a combined capacity of over 110MW, generating an estimated 435GWh of electricity annually.

IMCO Reports on CFE’s Finances

According to the Mexican Institute for Competitiveness, CFE reported a net loss for the third year in a row in 4Q22. Despite the losses, CFE's revenues for the year reached their highest level in the past five years, amounting to US$32.74 billion. The sale of electricity was the company's main source of income, accounting for 71.4% of its revenues. 

Latin American GDP Will Plummet if Climate Change Is Not Curbed

Moody's Investor Service announced that climate change could cause a drop of 16% in Latin America's Gross Domestic Product by the end of the century. If no new policies are implemented by the end of this period, it would lead to a 20% loss in the region's GDP. 

BP Looks to Expand Into Mexico’s Renewable Energy Market

BP is interested in growing its operations in Mexico to push its transition to renewable energy. Moreover, Angelica Ruiz, President Mexico, BP, said that Mexico’s solar and wind energy offer has a great potential and pointed out that BP has plans to integrate its energy in US supply chains to benefit from nearshoring. 

CFE Faces Slew of Lawsuits

State utility CFE has been the target of several ongoing lawsuits. The company has spent US$880 million on contingencies, 150% more than it accounted for in 2021. However, CFE reduced its losses to US$2.05 billion in 2022, down from US$5.474 billion in 2021. López Obrador’s energy strategy aims to rescue PEMEX and CFE. Nonetheless, according to experts, this is a risky strategy since both companies have serious liquidity problems and large amounts of debt. 

The Current Concerns of Energy Investors in Mexico

Mexico’s renewable energy sector has experienced significant changes in its business models due to shifts in public policy in the energy sector, causing concerns for energy investors. These include the cancellation of auctions for the sale and purchase of electricity and power, the criteria in the emission and accreditation mechanism for Clean Energy Certificates, reforms to the Electricity Industry Law, among others. 

Latin America Is Well-Positioned for Clean Energy Boom: GEM

Global Energy Monitor’s 2023 report underscored that at its current growth pace, Latin America will achieve regional net zero targets by 2030. According to the study,  the region is positioned to grow its power capacity by 460% by the end of the decade. However, Mexico, a former standout leader, has slowed down its growth in this sector mainly due to pro-fossil policies promoted by President López Obrador. 

Lack of Clean Energy Poses a Threat to Mexico’s Nearshoring

Mexico has become the quintessential nearshoring hub. Some of the industries that have found success with nearshoring in Mexico include automotive, aerospace, electronics and medical devices. However, experts believe that Mexico’s lack of renewable, affordable and reliable energy could deter investments. 

Women Occupy 15% of CFE’s Managing Positions

Nimbe Durán Téllez, Head, the Gender and Inclusion Unit, CFE said the percentage of women in management positions within the company reached 15% in 2023. Brenda Rosas, Gender Equality Link, CFE Generación VI, shared that the subsidiary has carried out efforts to include more women in the workforce, including a collaboration agreement with the University of Veracruz to let more women intern at CFE.

How Energy Poverty Affects Women

Energy poverty is a worldwide phenomenon that affects the well-being of women and girls, as it undermines their living conditions as well as their educational and economic opportunities. In this regard, women around the world have developed energy projects to diminish energy poverty and reduce the gender gap. These projects are key to extending electricity access and tackling energy poverty in marginalized communities.

Natural Gas Production Up 6.5%, Driven by PEMEX

Natural gas production in Mexico averaged 4.25Bcf/d in January, up from 3.99Bcf/d in January 2022. According to CNH, PEMEX supplied 4.03Bcf/d of the total, an increase from the 3.77Bcf/d that it supplied the previous year. The NOC managed to achieve a 5% year-over-year increase in natural gas production, according to Natural Gas Intelligence. What is more, imports of Mexico’s total gas supply in September 2022 represented 68%, a 3% decrease compared to September 2021. 

Photo by:   Envato Elements

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