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Rather Than Electricity Reform, Consider Ecological Transition

By Julio César Trujillo Segura - Bureau Soluciones Socioambientales S.A.
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By Julio Trujillo | General Manager - Tue, 07/12/2022 - 12:00

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To understand the debate between free competition and the exclusive tutelage of the state in the energy sector, we need to understand Mexico's history. The modern Mexican state rises from the revolution in which its natural resources were nationalized.

On this day, the legislative battle between the electrical reform and its counter-reform is part of the global trend toward monopolizing and opening up the energy and electricity sectors. Although it is better for the markets and consumers to have liberty of choice, there are sectors where the presence of multiple providers doesn’t represent an upgrade but rather creates uncertainty and mismatches.

There are sectors in the economy that naturally, due to their importance for the well-being of the population and high costs, tend develop as monopolies. The sector that until a couple of decades ago used to develop as a state monopoly was the energy industry. For the consolidation and expansion of electricity throughout the national territory it was necessary to implement project and state infrastructure policies. For this reason, the current government wanted to redirect the sector to its old channels.

The initiative of the Fourth Transformation government to reverse Peña Nieto's reform did not flourish but the government’s policy still stands due to the judiciary. The failure of the Supreme Court of Justice dimmed the effects of the rejection of the reform to the Constitution proposed by the president by recognizing the constitutionality of the Electricity Industry Law.

Although opponents of the López Obrador government construe the rejection to the Magna Carta as an absolute defeat, the truth is that the secondary law was approved and the Court validated the law, which allows the government to continue as the main actor and manager of the general interest in the production and distribution of electricity.

In the same way, an ideological fight is taking shape over who should lead the sector, which will be one of the main debates in the next presidential election in 2024.

Which view do we want for Mexico in the face of the monumental challenge that is the increment of energy demand, fueled by the population expansion? On the other hand, we need to stop the phenomenon of climate change and guarantee environmental protection.

This is why we need to create a real deep debate about the energy model that we must establish to respond to these three great demands: meet the demand for cheap energy, fight climate change and innovate.

Both the government and the opposition are moderately right, but they are wrong about inaccuracies that sometimes do not go beyond simple fashionable rhetoric. We have to overcome the smallness of the electrical reform or counter-reform to discuss the overtone: the necessary mechanisms to carry out the energy transition encompassed within the ecological transition.

Over these months of debate, multiple opinion leaders and opposition members took up the argument of promoting clean energies against highly polluting fossil energies, which isn't entirely true and does not take into account the particularities of the energy situation in our country. On one side, they committed the mistake of asserting that renewable energies are clean energies and that they do not have a high environmental cost. They leave out that there is a high environmental impact in the production of all the components to create the infrastructures of the so-called "green or renewable energies."

Clean energies are just decarbonized energies, which is insignificant when fighting the phenomenon of climate change. But its manufacture and later its implementation has a very large ecological footprint. Furthermore, I dare to say that the environmental impact is of the same magnitude as the production of fossil fuels. The extraction of hydrocarbons is changed by mining and the hoarding of agricultural and conservation soils.

As an example,  photovoltaic panels require the removal of thousands of tons of land, the creation of metal alloys at elevated temperatures and finally, setting them across large tracts of land. Data suggest that solar panels will never produce the necessary energy that is required for their manufacture and installation. 

The same situation presents itself with aeolian energy, which also has a large ecological footprint. The two sources that work the best are hydroelectric and geothermic; which in the Mexican case, are produced almost exclusively by the parastatal.

In parallel, we have another technical detail: “renewable” energies are of intermittent supply. In other words, solar panels will only produce energy when the sun is out. Wind turbines will only produce energy when the wind is strong enough. Therefore, they require alternative energy supply plants that can be used when the production of renewable energy ceases.

These alternative plants must have at least the same capacity as the renewable energy infrastructure they support. This is the motive for the great boom in gas infrastructure. They are the most profitable for the private sector but not for the final consumer.

Furthermore, the model that they search to emulate is the same as that used by the Europeans. And we have seen how this system increases electricity bills due to the compensation that has to be provided to subsidize renewable energies and auxiliary gas plants. Think about what will happen this winter in Europe if the Ukrainian war continues. The renewable energy supply system is more than questionable.

It has been seen that renewable energies aren't as "clean" as believed, although they are decarbonized. For this reason, a great advance was made to fight against the greenhouse effect of the burning of fossil fuels. This leads me to analyze the second paradigm of the debate. Can we quit fossil fuels?

For now, the answer is clear: It is impossible! Hydrocarbons are essential. Oil is one of the most fascinating raw materials on the planet. With it, we can do thousands of different things; it is a component of organic chemistry, non-renewable, its origin is located in the wheel of life of organisms that inhabited the planet millions of years ago.

Oil allows us to generate the most cost-beneficial energy, while its chemical qualities give us the capacity to create endless objects and have multiple uses. In the mid-1950s, humanity began the reign of plastic and in the ‘70s, the agricultural sector experienced the green revolution thanks to chemical fertilizers and the use of tractors.

Our society is highly dependent on oil and on gas. We could say that electrical energies and fossil fuels have different fields of action. Worldwide, electric energy consumption does not even represent 30 percent of all energy consumption.

Unfortunately, at the moment, we don’t have the technologies to replace the vast majorities of combustion machines that have an engine and make life easier for us by being able to shift and move so much weight: tractors, trailers, commercial vessels or planes. The thing that electric motors lack is the power required to do these tasks.

Therefore, it is important to measure the privileged situation that our nation has by belonging to the select club of oil producing and exporting countries. The Mexican reality is different from the vast majority of rich and/or emerging countries in the world. As the 12th-largest producer of this kind of energy in the world, our energy sovereignty is not as vulnerable as those of other countries. What is happening in Europe is meaningful: an energy crisis due to the Russia-Ukraine war that has reduced the availability of Russian gas. Humanity will not stop consuming hydrocarbons overnight.

In these post-COVID times, it is illustrative how, with the economic reactivation, the demand for hydrocarbons skyrocketed to even higher levels than before the pandemic started. This advantage for Mexico should allow us not only to be self-sufficient, as the López Obrador government wishes but it should also allow us to fulfill the energy transition. and of course, the ecological transition because this requires large amounts of energy and natural resources.

The countries that signed the Paris Agreement, including Mexico, committed to drastically reduce greenhouse gas emissions. The reasoning was simple: most of the signatory countries are not oil producers. Therefore, it was easy, in theory, to drastically decree the end of fossil fuels since it apparently had no major financial implications.

Meanwhile for oil producing countries like Mexico, changing from non-renewable to supposedly green implies a great economic loss.

Also, we are a country with an emerging economy, with little development of infrastructure and technology. Remember that rich countries with a high level of development and progress had to burn gargantuan amounts of fossil fuels, meaning that their ecological footprints are infinitely larger than ours.

So, to be fair, countries like Mexico deserve more financing and technology transfer to allow our sustainable development. Something that, in fact, does not occur.

In this sense, the opposition is almost right in saying that we must comply with international commitments but it is more due to ignorance than bad faith to say that the commitment to reduce emissions has a deadline of 2030. In other words, the current government is not failing to comply, it is only making it difficult to reach the goal.

It is also necessary to specify that Mexico only follows the international trend of the countries that form the OECD, because none of them have significant reductions. Actually, it is the opposite, as several of them have increased their emissions.

Searching for new sources of renewable and cleaner energies with the inevitable exit from the use of combustion engines requires a great financial and technological feat. Only the ultra-rich countries have the capacity to attempt the transition.

Even if we had the technology, those changes are so massive and sudden that there isn't enough time or raw material at an acceptable cost to replace all combustion engine machines.

The repercussions of future scarcity due to the lack of energy supply and the lack of natural resources and raw materials make it more difficult to face the challenge. That’s because our world is and will be increasingly disrupted by climate change

There are not a thousand solutions to the problems. If a change in the types of energy consumption, overall, is needed, then we need a deep change in our society. It can't persist with extreme consumption. Background changes have to be made.

We have to move toward renewable energies to combat climate change but, at the same time, we must reduce energy consumption. Which isn't happening. In fact, it’s the opposite: our energy and natural resource consumption is skyrocketing, as well as the production of pollutants and waste.

Math never lies. There is a demographic outbreak and a growing exploitation of the resources of this planet with large-scale environmental damage. Our model, based on the omission of environmental externalities, scarcity and depletion of resources, makes us foresee an unstable world on the verge of collapse.

Humanity is facing a crisis of civilization and, therefore, we as Mexicans have to seek real solutions. We cannot continue with these neglectful behaviors of wanting to satisfy our needs and cravings without visualizing the needs of future generations. It is everyone's responsibility, but first and foremost, it’s the responsibility of the large corporations and governments. There are systemic and collective changes that we have to process.

The argument is not about who should lead the country's energy sector. The issue is how are we going to accomplish our consumption at an acceptable cost and how we are going to deal with the depletion of energy and natural resources. The course of action is to drop our individualistic vision and the insatiable search for pecuniary gains. We have to turn toward the search for community satisfaction under the precept of respect for our environment. In other words, we need the ecological transition from wild capitalism to happy sobriety. 

Photo by:   Julio César Trujillo Segura

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