Mexican Presidential Candidates Agree on Clean Energy Shift ‘Nearshoring’ – DESCRIPTION

The three main candidates vying to succeed Mexican President Andrés Manuel López Obrador agree that the country must accelerate the transition to cleaner forms of energy, boost electromobility and encourage more foreign companies to move production plants to Mexico in a process known as “nearshoring.”

However, there are differences as to the role that state-owned energy companies Pemex and CFE should play in the transformation.

On Sunday, Mexicans will vote for the next president.

Former Mexican mayor Claudia Sheinbaum, a member of Lopez Obrador’s Morena party, is competing with Xochitl Gálvez, representing the Strength and Heart for Mexico party, and Jorge Álvarez Maynez from the Civic Movement party.

In most polls, Sheinbaum has a clear lead. A recent survey by polling firm Parametria showed Sheinbaum with 50% support and Gálvez with 34%.

While Sheinbaum stated that she would continue Lopez Obrador’s policies to strengthen Pemex and CFE, Gálvez called for a radical change in Pemex’s business strategy, while Álvarez supports the gradual transition of both companies away from fossil fuels.

While Gálvez and Álvarez said they would be more open than the current government to private sector participation in Mexico’s energy markets, Sheinbaum said the CFE would retain 54% of the market, limiting the private sector’s role in the electricity market to transmission and distribution.

While it is unclear how much involvement of private companies in the hydrocarbon sector would occur, Sheinbaum supported “reasonable” participation of private companies in the domestic energy market, provided it does not weaken electricity supplier CFE.

Here are the three candidates’ proposals:

Sheinbaum’s campaign declared that her goal would be to “decarbonize the energy matrix as quickly as possible,” adding that the candidate wants the energy transition to be one of the “hallmarks” of her administration.

She said she would seek to accelerate the transition to cleaner forms of energy while ensuring Mexico continues to supply sufficient energy at affordable prices. She promised to keep fuel price increases below inflation, continuing López Obrador’s policies.

The candidate also promised to develop a 30-year plan to reduce greenhouse gas emissions and meet Mexico’s international commitments on climate change.

To that end, Sheinbaum said she will maximize the use of renewable energy, increase energy efficiency and electrify transportation as much as possible.

Additionally, she called Pemex and CFE “strategic public companies” that need to be strengthened to benefit consumers, support investment relocation and serve the national interest.

Sheinbaum said she understands that any push to bring more companies into the country will increase demand for clean energy.

It announced a plan to invest more than $13 billion in new power generation projects by 2030, including increasing wind and solar energy production as well as modernizing hydropower plants.

Additionally, it has stated that it wants to make greater use of natural gas and more combined cycle power plants in power generation, while increasing the share of geothermal, hydro and bioenergy resources.

Sheinbaum said he would strive to convert more than half of Mexico’s heavy-duty and passenger vehicle fleet to cleaner forms of energy and expand Mexico’s electricity infrastructure to support the transition to electromobility.

Sheinbaum wants Mexico to become self-sufficient in transportation fuel production by maintaining older Pemex refineries and starting operations at the new 340,000-barrel-per-day Dos Bocas plant, leading to a sharp decline in fuel imports.

While oil and gas production will remain an “indispensable” part of Pemex’s business, Sheinbaum believes that expanding the company’s role in clean energy could make debt refinancing easier.

Sheinbaum also said Pemex could help expand Mexico’s generating capacity by adding thermal power plants at refineries.

Her administration will shift away from Lopez Obrador’s efforts to prioritize oil production in Mexico and aim to limit oil production to 1.8 million barrels a day, she said, with renewable energy sources meeting the rest of demand.

Gálvez seeks to radically restructure Pemex’s business model to ensure the company remains profitable and returns to the capital markets.

Its proposals include Pemex focusing on oil exploration and production and scaling back its refining operations by relocating Pemex’s Cadereyta refinery in Nuevo León state and Madero facility in Tamaulipas to focus on renewable hydrogen production.

Gálvez said she would change the name of Pemex to Energias Mexicanas to shift the company’s focus away from oil.

Gálvez proposed allowing private companies to participate in oil exploration and production, which was allowed under Mexico’s 2013 energy reforms.

She also said she would commit Mexico to achieving net zero carbon emissions by 2050 and for the country to source 50% of its energy from renewable sources by 2030. He believes that to achieve their decarbonization goals, Pemex and CFE must transition to new forms of energy producing clean energy.

Additionally, Gálvez stated that she would support electromobility and electric public transport to reduce the consumption of gasoline and diesel, while promoting the increased use of biofuels.

It also promised to build 100 wind and solar projects and install 10,000 electric vehicle charging stations, and said it would support the production of vehicles, equipment and machines powered by green hydrogen.

On the fuel market, Gálvez’s campaign said she would encourage private companies to work with Pemex to meet domestic demand for gasoline and diesel.

Meanwhile, Álvarez said he would impose a deadline on Mexico to phase out fossil fuels, in part by cutting subsidies and turning Pemex and CFE into renewable energy companies.

The candidate said he was committed to the energy transition and acknowledged that this change would require the government to reduce revenues from fossil fuels. He suggested that revenues from lithium production, wind and hydropower would make up for the loss of money from fossil fuels.

Álvarez also called for more clean energy projects, including solar and wind power, and the introduction of an eco-tax on electromobility and public transport projects.

His campaign aimed to close the Cadereyta refinery and the natural gas-fired Tula plant in central Mexico to improve air quality.

Álvarez was more adamant than just building new infrastructure, increasing urban mobility and ending fuel subsidies.

While Álvarez and Gálvez said they would support policies that attract non-Mexican companies to enter the country, they stressed that the Mexican government must protect private investment and uphold the rule of law.

This content was produced by the Oil Price Information Service operated by Dow Jones & Co. OPIS is operated independently of Dow Jones Newswires and The Wall Street Journal.

— Reporting: Karla Omaña, [email protected]; Editor: Jeff Barber, [email protected]

(END) Dow Jones Newswires

29/05/24 16:15 ET