Augusta Saraiva and Alex Vasquez, Bloomberg News
MEXICO CITY
EnergiesNet.com 10 17 2024
President Claudia Sheinbaum seeks to remove unfair advantages given to private energy companies operating in partnership with public entities in Mexico, although she counts on private capital to achieve her ambitious renewable energy goals, according to a top government official.
“The president is very much open to private participation,” Environment Minister Alicia Barcena said in a recent interview. “But the previous public-private partnerships were a bit unfair because they were about the public financing the private without obtaining the same revenue.”
Facing the widest budget deficit in nearly four decades, Mexico’s new president will need private capital if she is to deliver on her goal to expand renewable energy to 45% of total power generation by the end of the decade, from 24% in 2022. Experts estimate the plan could cost up to $50 billion, given insufficient investment in state-owned energy companies in recent years, especially in transmission and distribution.
Sheinbaum’s predecessor, Andres Manuel Lopez Obrador, was all but hostile to private and particularly foreign companies looking to invest in Mexico’s energy sector, instead lavishing Petroleos Mexicanos, the state-owned oil company known as Pemex, with tax relief and capital injections that still left it as the world’s most indebted oil major.
Sheinbaum’s balancing act will be crucial to assuage investors worried with the latest reform bills, including a complete overhaul of the country’s judiciary, which have been approved by lawmakers since the ruling party took nearly absolute control of both houses of congress.
“She doesn’t want to put any obstacle, but to review the rules of public-private partnerships, which I think is only fair to do,” said Barcena, who until the end of September was the country’s foreign minister under Lopez Obrador.
Barcena will start working with Pemex to monitor its emissions and develop a plan to reduce both carbon and methane emissions. “What I want to do is to reduce pollution, this is my goal, and I’m gonna work very hard on that.”
Energy Transition
The governments of Mexico, US and Canada should work in a joint energy transition initiative with private companies to have a more dynamic electric sector, Barcena said.
“I think that the world is going to bring us to the table, because at the end of the day, the problem is climate change,” Barcena said. “The only way to stop carbon emissions as we know them now is to have this energy transition toward renewables, solar, wind, geothermal.”
Barcena, an experienced diplomat, took on the job of foreign minister in June 2023, when her predecessor Marcelo Ebrard resigned to pursue the ruling party’s presidential nomination. Previously, Barcena was Mexico’s ambassador to Chile and the executive secretary of the Economic Commission for Latin America and the Caribbean, known as Cepal, for almost 14 years.
Barcena said she’s aware that Mexico is still an economy that relies on fossil fuels, but she defended that the country should be able to use natural gas to produce green hydrogen.
Mexico wants the government to control 56% of the energy sector, as Sheinbaum has said several times, but that goal doesn’t exclude the private sector. “I think a North American effort toward energy transition would be very attractive.”
bloomberg.com 10 16 2024
