What Will Mexico’s Energy Policy Look Like Under Its First Female President?

• Claudia Sheinbaum will become Mexico's first female president in October and plans to balance renewable energy investments with continued support for Pemex.
• Sheinbaum has pledged $13.6 billion for renewable energy projects, aiming to boost production by 50% by 2030 while maintaining state control over Pemex.
• Mexico faces significant challenges including Pemex's debt, underdeveloped renewable energy sector, and climate-related issues such as severe droughts and water shortages.

There has been great criticism over Mexico’s energy policies in recent years, as the country’s President Andres Manuel Lopez Obrador (AMLO) has continued to ardently support the oil and gas industry above renewable alternatives, while the state-owned oil company Pemex becomes increasingly indebted. There is now major speculation around what is in store for Mexico’s energy sector under AMLO’s Morena party successor Claudia Sheinbaum. Claudia has mainly pledged to follow the policies put in place by her predecessor, but many are hoping for a shift in energy policy rooted in her background as a climate scientist. 

Claudia Sheinbaum will become Mexico’s first female president in October this year, after winning the June election. Sheinbaum has an extensive academic background, with a PhD in energy engineering from the National Autonomous University of Mexico, with experience working as the Environmental Secretary for Mexico City in 2000, as well as forming part of the UN panel of climate scientists that was awarded the 2007 Nobel Peace Prize. 

During her time as mayor of Mexico City, she carried out innovative energy projects such as the electrification of the city’s bus fleet and the development of a massive rooftop solar project at the Central de Abastos wholesale market. Her track record gives hope to many energy experts who see great potential in the future of Mexico’s renewable energy sector. 

During her presidential campaign, Sheinbaum pledged to invest $13.6 billion in renewable energy, including wind and solar farms and hydroelectricity. She hopes to boost renewable energy production by as much as 50 percent by the end of her term in 2030. However, she also stated that she intended to support Pemex and keep it under state control, signalling an ongoing commitment to national oil and gas. The incumbent president faces tough decisions over the next few years when it comes to energy. Although Mexico has deep historic ties with its oil industry, in recent years Pemex has become increasingly indebted, being labelled as the biggest liquidity and debt concern among its Latin American peers by Fitch Solutions last year. Further, Pemex has been repeatedly criticised for its failure to improve its health and safety standards following several major incidents in recent years. 

Meanwhile, Mexico’s renewable energy industry is extremely underdeveloped, despite having significant potential. According to the U.S. Department of Energy, Mexico has the potential to establish 24,918 GW of solar photovoltaics, 3,669 GW of wind power, 2.5 GW of conventional geothermal energy, and 1.2 GW of hydropower. Several parts of Mexico are currently seeing the direct effects of climate change. Mexico City is battling a major water shortage, which threatens the city’s drinking supply, while other parts of the country are facing soaring temperatures and severe drought. This demonstrates the need for greater climate action through a green transition. 

Mexico signed the Paris Agreement under the leadership of former president Peña Nieto and has made several ambitious climate pledges since. In 2022, Marcelo Ebrard, Mexico's former Foreign Minister, pledged to reduce GHG emissions by 35 percent by the end of the decade at COP27, marking a significant increase from the previous 22 percent reduction target. Meanwhile, Mexico’s energy transition law targets 35 percent renewable electricity generation by 2024. However, President AMLO did little to achieve these targets during his time in government. AMLO has spent billions keeping Pemex afloat over the last six years while dedicating little funding to the expansion of Mexico’s renewable energy sector. According to the Climate Change Performance Index, Mexico’s track record on climate change policies worsened under the leadership of AMLO, mainly because of higher subsidies for fossil fuels and little progress in reducing deforestation.

While there is optimism around Sheinbaum’s future management of the energy sector, she faces major challenges in bringing about change. She must contend with the biggest budget deficit in decades, having to choose where to spend public funds carefully. Meanwhile, despite its poor performance, Pemex continues to contribute to Mexico’s state revenues. In 2022, Mexico produced an average of 1.6 billion bpd of crude, as the world’s 11th biggest oil producer. In addition, ALMO spent several years accelerating the shift away from private energy funding to the nationalisation of the country’s energy sources, which has resulted in diminished private investor interest in the sector. 

Although Sheinbaum faces a vast array of challenges in taking Mexico’s energy industry in a different direction, there is huge potential for the expansion of the country’s renewable energy industry, as well as for greater collaboration with other world powers. For example, according to Sheila Jasanoff, a professor of science and technology studies at the Harvard Kennedy School, Sheinbaum’s international climate experience could “make her a very valuable ally for a second Biden administration”, if President Biden is re-elected in the upcoming elections. She could also help Mexico to take a leading role in global climate action by developing the country as a major renewable energy hub in the Americas. However, only time will tell whether Sheinbaum is dedicated to overcoming the challenges in Mexico’s energy market to diversify its energy mix and thereby strengthen energy security.

By Felicity Bradstock for Oilprice.com

More Top Reads From Oilprice.com:

• Tesla and Baidu Partner for Full Self-Driving Test
• Ukraine Peace Summit Raises Hopes for Dialogue, But Challenges Remain
• Carbon Capture Technology Called a 'Boondoggle' for Oil Industry