Mexico’s progress on its clean energy transition is headed in reverse. The nation’s greenhouse gas emissions from the energy sector increased by 11% last year to reach a five-year high of more than 175 million metric tons of carbon dioxide (CO2). This climate backtracking stems from a number of causes from failing hydropower plants to years of a tumultuous and petro-aggressive presidential term under controversial President Andrés Manuel López Obrador.
In 2023 Mexico’s hydropower production dropped to 20-year lows. Thanks in large part to a whopping 40% drop in hydropower output, not to mention a lackluster performance from the wind energy sector, clean energy accounted for just 22% of the Mexican energy mix in 2023. This represented a significant drop, from 26% in 2022 and over 27.5% in 2021. By comparison, consumption of fossil fuels rose from 260 TWh in 2022 to 270.5 terawatt hours (TWh) in 2023.
The massive drop in hydropower production comes as a result of prolonged hot and dry weather, which has impacted hydropower production in hotspots around the world over the last several years. Drought-related risks in the Mexican hydropower sector have been foreseen for years now, and will likely continue to be a factor, and probably a worsening one, as extreme weather events and searing summer temperatures intensify over the course of climate change.
In the meantime, the political environment in Mexico is only adding cause for carbon concern. President Andrés Manuel López Obrador has proven himself to be extremely bullish about bolstering Mexico’s energy independence, primarily through doubling down on fossil fuel production and propping up the continuously troubled national oil and gas firm Pemex. López Obrador has consistently failed to make good on clean energy pledges and has prominently campaigned for the reinvigoration of the nation’s oil and gas sector.
But López Obrador’s six-year term is nearly over, and it will be his final term. In Mexican law, the presidency is not eligible for reelection. Big changes could be coming for the Mexican energy industry, but without a crystal ball it’s extremely difficult to say precisely what they may be. But the tide is clearly turning against the President’s platform – less than a month ago, Mexico’s top court overturned his flagship nationalist energy legislation, finding that it violates the Mexican constitution and violates free competition laws.
With Mexico’s energy sector reopening to foreign investment, we could see a crucial trend toward re-diversification. The hope is that, since Pemex is a corrupt train wreck, climate pledges are becoming ever more stringent, and on top of that Mexico holds massive renewable energy potential, investors will be eager to invest in expanding wind and solar energy across the country. However, neither of the front-running presidential candidates, Xochitl Galvez and Claudia Sheinbaum, has elucidated her proposed energy policy.
The re-carbonization of the Mexican energy sector is of particular concern as the Mexican economy is the fastest growing in all of North America. The breakneck pace of Mexico’s economic growth is due in part to its growing role as a manufacturing hub for consumers north of the border. This bodes poorly for Mexico’s carbon footprint and for global climate goals writ large, as manufacturing tends to be a major energy hog. The manufacturing and production sector represents one-fifth of carbon dioxide emissions globally, and a whopping 54% of the world’s energy usage.
“If Mexico's power sector remains overwhelmingly reliant on fossil fuels as industrial output keeps growing,” Reuters recently reported, “the country's rising power emissions may offset some of the declines in neighboring nations.” On the other hand, the rise in manufacturing for the U.S. market could be viewed as the U.S. merely outsourcing its dirty work to maintain its own decarbonization trends.
By Haley Zaremba for Oilprice.com
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Maintaining the momentum of rapid economic growth is far more important than meeting its climate change goals. It would be great if both goals could be achieved but failing that precedence should be always given to economic growth over improving its carbon footprint.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert