Here’s How Mexico Can Clean Up Its Dirty Energy Industry

As delegates from around the world finish up their business in Glasgow at the United Nations climate conference, Mexico has not increased its emissions-mitigation goal, as countries pledged under the 2015 Paris Agreement.

Its president, Andrés Manuel López Obrador, is doubling down on policies that would make his country the second-largest greenhouse gas emitter in Latin America and the 16th largest in the world, even more of a polluter.

An old-fashioned leftist who grew up in Mexico’s oil-producing region, Mr. López Obrador has long supported the government-owned electric utility Comisión Federal de Electricidad, or C.F.E., and the government-owned oil producer, Petróleos Mexicanos, or Pemex, as sources of jobs and economic growth, and denounced privatization for shifting profits to the benefit of a few corporations. Those energy behemoths have done little to reduce emissions from fossil fuels, while private investments are behind many solar and wind projects in Mexico.

But when Mr. López Obrador took office about three years ago he began to undo reforms undertaken by his predecessor, Enrique Peña Nieto, that allowed more private energy investment. This counterreform significantly undermined Mexico’s ability to promote clean energy and lower emissions. Mr. López Obrador has said his aim is to balance the private and public energy sectors and secure energy independence for Mexico, apparently by removing private competition from the debt-ridden public companies.

His administration has required the government, when buying energy, to give priority to C.F.E., with its less-efficient, fossil-fuel-based plants, over cheaper solar and wind energy produced by private companies. That move has been challenged in court. And a bill proposed by Mr. López Obrador to limit the amount of electricity generated by private companies to 46 percent, from 62 percent, faces significant opposition among members of Congress, environmentalists and private companies.

No matter the fate of those measures, Mr. López Obrador has created such a hostile environment that new investments in renewable energy are much less likely. If no new investments are made, Mexico will be unable to reach its clean-power goals under the country’s 2012 General Law on Climate Change. Mexico must run its renewable-energy plants continuously to meet its 2021 target and build new renewables plants to meet its longer-term targets.

Even if state companies are going to continue to dominate Mexico’s energy industry, the government could begin greening their operations. C.F.E. power plants burn more fuel oil and coal than privately owned plants and cost more to run. The company could start replacing fuel-oil plants with clean energy sources. Renewable-power projects would also reduce electricity costs since wind and solar are the cheapest energy sources. C.F.E. should also upgrade its power plants and electrical grid to make them more efficient, to use less fuel, and expand the use of smart technologies to help customers lower their energy use.

Pemex has also done little to diversify investments into low-emissions technologies, and reduce oil exploration, as many international oil companies are doing. Instead, Pemex says it wants to boost oil production and is building a large new refinery. And while many oil companies have eliminated flaring — the practice of burning off gas, which releases methane — Pemex’s gas flaring went up by 68 percent between 2019 and 2020 because of outdated infrastructure.

During a recent visit to meet Mr. López Obrador, the U.S. climate envoy, John Kerry, indicated the United States would provide technical assistance and financing to increase efficiency and reduce emissions. The United States could help Pemex refineries improve efficiency and lower emissions, add technologies to monitor gas flaring, use renewable power for operations, and C.F.E. to design efficiency programs to reduce electricity consumption and design clean-energy programs.

Other state energy companies in Latin America are doing more to address climate change. Ecopetrol, a Colombian oil company, committed to net-zero carbon emissions by 2050 and agreed to acquire Isagen, an electricity transmission and distribution company, as part of its strategy to diversify into low-emissions technologies.

If Mexico’s political leadership won’t back private investment in clean energy, state energy companies could at least clean up their own operations, and the United States should continue to try to collaborate for a better future.

Lisa Viscidi studies energy and climate change in Latin America at the Inter-American Dialogue, a think tank based in Washington, D.C. MK Vereen is a research assistant at the institution.

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