What will Mexico’s energy policy look like under the rule of its first female president?

Mexico’s energy policy has come under great criticism in recent years as the country’s president, Andres Manuel Lopez Obrador (AMLO), continues to fervently support the oil and gas industry over renewable energy alternatives, while state oil company Pemex becomes increasingly indebted. There is currently considerable speculation about what awaits Mexico’s energy sector under the government of Morena’s successor in AMLO, Claudia Sheinbaum. Claudia has mostly pledged to follow the policies put in place by her predecessor, but many are hoping for a change in energy policy, which is rooted in her experience as a climate scientist.

Claudia Sheinbaum will become Mexico’s first female president this October, after winning the June elections. Sheinbaum has extensive academic experience, having earned a PhD in Energy Engineering from the National Autonomous University of Mexico, experience serving as Mexico’s Secretary of the Environment in 2000, and as a member of the UN panel of climate scientists that received the 2007 Nobel Peace Prize .

While mayor of Mexico City, she led 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 achievements give hope to many energy experts who see enormous 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 hydropower. It hopes to increase renewable energy production by as much as 50%. until the end of its term in 2030. However, it announced support for Pemex and keeping it under state control, signaling its continued commitment to the country’s oil and gas. The incumbent president will face difficult decisions regarding energy in the next few years. Although Mexico has deep historical ties to the oil industry, Pemex has become increasingly indebted in recent years, and last year Fitch Solutions described it as the largest liquidity and debt concern among its Latin American competitors. Furthermore, Pemex has been repeatedly criticized for its failure to improve health and safety standards following several serious incidents in recent years.

Meanwhile, Mexico’s renewable energy industry is extremely underdeveloped, even though it has significant potential. According to the U.S. Department of Energy, Mexico has the potential to generate 24,918 GW of solar photovoltaics, 3,669 GW of wind energy, 2.5 GW of conventional geothermal energy and 1.2 GW of hydropower. In several parts of Mexico, the direct effects of climate change are now visible. Mexico City is facing a severe water shortage that is threatening the city’s drinking water supply, while other parts of the country are grappling with soaring temperatures and severe drought. This shows the need for stronger climate action through a green transition.

Mexico signed the Paris Agreement under the leadership of former President Peña Nieto and has since made several ambitious climate pledges. In 2022, at COP27, Marcelo Ebrard, Mexico’s former foreign minister, pledged to reduce greenhouse gas emissions by 35 percent by the end of the decade, a significant increase from the previous reduction target of 22 percent. Meanwhile, the Mexican Energy Transition Act assumes that by 2024, electricity production from renewable sources will be 35%. However, President AMLO did little to achieve these goals during his term in government. Over the past six years, AMLO has spent billions to keep Pemex afloat while allocating little to expand Mexico’s renewable energy sector. According to the Climate Change Performance Index, Mexico’s performance on climate change policy has worsened under AMLO’s leadership, largely due to higher fossil fuel subsidies and little progress in reducing deforestation.

While Sheinbaum’s future leadership in the energy sector is optimistic, she faces significant challenges in implementing change. It must grapple with the largest budget deficit in decades and carefully choose how to spend public funds. Meanwhile, despite poor performance, Pemex continues to contribute to Mexican state revenues. In 2022, Mexico produced an average of 1.6 billion barrels of oil per day, being the 11th largest oil producer in the world. Moreover, ALMO has been accelerating the shift away from private energy financing towards the nationalization of domestic energy sources for several years, which resulted in a reduction in the interest of private investors in the sector.

While Sheinbaum faces a number of challenges in moving Mexico’s energy industry in a different direction, there is enormous potential to grow the country’s renewable energy industry, as well as better cooperation with other world powers. For example, according to Sheila Jasanoff, a professor of science and technology 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. It could also help Mexico take a leading role in global climate action, developing the country as a major renewable energy center in the Americas. However, only time will tell whether Sheinbaum is committed to overcoming the challenges facing Mexico’s energy market to diversify its energy mix and thereby strengthen energy security.

Author: Felicity Bradstock for Oilprice.com

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