Mexico Falls Further Behind on Climate at Leaders Summit

Mexico once more failed to demonstrate climate ambition and leadership, this time at the Leader’s Summit on Climate. While several countries announced more ambitious emission reduction targets, President Andrés Manual López Obrador (AMLO) used the Summit to push forward a misguided energy policy that threatens the well-being of Mexican citizens and the global climate, attempting to distract from Mexico’s failure to advance a clean energy transition. The proposals AMLO brought essentially ensure that Mexico will not meet its international climate commitments and clean energy targets. It is increasingly urgent for the international community to hold Mexico accountable and to work with stakeholders in Mexico that can help prevent further backsliding.

President López Obrador outlined three proposals that he had previously described in more detail in a video released on social media:

  1. Limit crude oil production to domestic fuel needs, refined locally
  2. Modernize existing hydroelectric plants to displace coal and fuel oil
  3. Expand the Sembrando Vida (Sowing Life) tree-planting initiative, including to Central America

The first two demonstrate AMLO’s adherence to an energy strategy that seeks to re-establish the market power of the fossil-fuel dependent state-owned petroleum (PEMEX) and electricity (CFE) companies at the expense of renewable energy options like solar and wind. The third seems to be an attempt to draw attention away from the fact that Mexico is doing little, if anything, to reduce energy sector emissions. Together, they demonstrate an utter disregard for the gravity of the climate crisis.

Below is a recap of what these proposals entail and what’s at risk.

Increased local fuel refining will harm human health and increase global warming.

According to AMLO, Mexico would cap its crude oil production at 2 million daily barrels, down from 3.4 million. This production would be refined locally, ending the practice of exporting crude and importing gasoline. However, AMLO’s proposal actually means Mexico would produce and use more fossil fuels—precisely the opposite of where countries should be headed.

Mexico hasn’t produced more than 3 million daily barrels since 2007; in 2020 it produced an average of 1.7 million daily barrels. So, AMLO’s “cap” is actually higher than where we are today. In addition, increasing the amount of crude refined locally would result in the use of more dirty fuel oil in electricity production.

Fuel oil is a high sulfur byproduct of the refining process that is linked to respiratory and cardiopulmonary disease and premature death. State of the art facilities can limit this residue to less than 5%. But in Mexico, up to 30% of the crude oil processed by refineries is transformed into fuel oil. The more of its crude Mexico refines at home, the higher the supply of fuel oil. Until relatively recently, much of this residual byproduct could be sold to the maritime industry. Yet as this sector adheres to stricter emission standards, Mexico has had to look for an alternative market for its fuel oil.

This is one of the reasons why the recent modifications to Mexico’s Electric Industry Law are so concerning. If implemented, the modified law would require changes to the order in which electricity is fed into the national grid resulting in the burning of more fuel oil. Instead of dispatching electricity based on lowest cost, CFE owned plants—including fuel oil-powered plants—would be used before privately held renewable energy.

A recent analysis of the environmental impacts of the modified law found that as national refining levels increase, fuel oil production could reach nearly 300,000 barrels per day by 2024, representing an eleven-fold increase from current levels. In the same time frame, the fuel oil consumed by CFE thermal plants could increase up to 70%, with the remainder made up by natural gas. This would mean that 771,269 tons of sulfur dioxide (SO2) would be pumped into the air, jeopardizing the health of local communities. It would also result in annual emissions from the electric sector of 169.7 million tons of CO2 by 2024, a 32% jump from 2020 levels. There is simply no way that Mexico can meet its 22% emission reduction commitment under such a fuel oil dependent scenario.

Hydro would not necessarily displace all fuel oil and coal. Solar and wind absolutely would.

AMLO claims that renovating CFE’s existing hydroelectric plants will reduce reliance on fuel oil and coal. However, even with modernizations, hydropower may not be sufficient to displace all the fuel oil that can be anticipated if the proposed changes to electricity dispatch are implemented. Prioritizing less expensive options like wind and solar is the best way to phase out the use of coal and fuel oil.

In addition, local groups point out that modernizing Mexico’s hydropower plants, many of which are 40 to 50 years old, could result in environmental damage. Variations to precipitation patterns due to climate change also mean that a hydropower-centric emission reductions strategy is risky at best.  

Nature-based solutions are necessary but must be well designed and coupled with rapid reduction of energy emissions.

Nature-based solutions, including forest protection and restoration, are a critical part of addressing the climate crisis. This is an area in which Latin America, with its wealth of natural resources and biodiversity, is uniquely suited to contribute. In Central America, nature-based solutions can indeed help address drivers of migration by building resilience and reducing food insecurity. But such efforts must be very well designed, implemented and monitored.

Mexico’s Sembrando Vida initiative holds a lot of promise for achieving both climate and social development goals in rural areas. But there are concerns that design and implementation flaws have contributed to loss of forest cover in some areas. Mexico should focus on strengthening the program to ensure its success so that it can truly serve as a model for other countries. It should not use the initiative’s potential benefits to distract from the urgency of reducing its energy sector emissions.

It’s time for the international community to more forcefully call out Mexico’s retreat from its climate commitments.

Mexico is the 12th largest greenhouse gas emitter in the world and its productive sectors are deeply intertwined with those of its North American neighbors. Its retreat from international climate commitments is regionally and globally significant. The United States and other progressive climate leaders must urgently engage with Mexican stakeholders to help turn back this trend. There are actions that would allow Mexico to advance toward emission reduction goals—from harmonizing emission and efficiency standards to ramping up energy efficiency and distributed solar. It’s time for President López Obrador to stop the distractions and start putting in place real solutions to climate change.

About the Authors

Carolina Herrera

Manager, Green Finance & Climate Change, Latin America Project

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