Once again, the absence of the Law of the Energy Transition became a trending topic as the Senate failed to pass this law. Rafael Pacchiano, Minister of the Environment, was convinced the legislation would be approved just in time for President Peña Nieto to present it at COP 21 in Paris. However, the Energy Commission of the Senate never carried out the meeting intended to approve the much awaited law, which is an important instrument in ensuring that the country meets its clean energy generation and CO2 equivalent emission reduction objectives.
The Law of the Energy Transition should have been passed in the first half of 2015, but it was put on the back burner because the authorities focused on preparing the wholesale electricity market. This time, the obstacle was the inability to reach an agreement with the private sector regarding subjects like the price of Clean Energy Certificates. The strongest opposition to the Law of the Energy Transition comes from the steel industry, with representatives claiming that this legislation represents “a significant risk for the industry and the well-being of Mexican society.” The National Chamber of the Iron and Steel Industry (CANACERO) argued that Mexico emits fewer emissions than China and the US, therefore imposing emission reduction goals is incongruent. Indeed, Mexico is holds the 14th position in the list of countries by CO2 emissions. While Mexico does not make it into the top ten, like China and the US, which hold the first and second place respectively, it cannot afford to rest in its laurels. In fact, the climate change scenarios forecasted for Mexico in the 2015-2039 period are worrisome, as 1.15-2° increase in the country’s temperature will have sever environmental, social, and economic consequences.
According to CANACERO, Mexico should not make commitments that its commercial partners are not making because the country’s competitiveness could be jeopardized. The steel industry’s conclusion is that discouraging investment would lead to more imports, which would result in higher carbon emissions than producing locally. Adding to these claims, CANACERO stated that the 35% clean energy generation goals –which the Law of the Energy Transition would push and enforce– are not aligned with the country’s conditions in terms of competitiveness. The Chamber added that this law should focus on fostering the use of natural gas, the energy source that has been favored the most with the Energy Reform, and emission reduction rather than clean energy consumption. In fact, the President of the Institute for Industrial Development and Economic Growth warned that imposing clean energy use on the industrial sector could raise tariffs by 70%, resulting in US$18 billion costs for end users. It is worth noting that, according to CRE’s COPAR 2014 document, the average cost of solar photovoltaic energy is US$150.59 per megawatt-hour, while that of conventional thermoelectric technology costs US$160.2 per megawatt-hour. The same document explains that even in the case of combined cycle plants, fuel can represent 60% of the associated costs, whereas renewable energy sources like wind or solar do not entail variable generation costs.
The Mexican government is proud of how the country has internationally acknowledged for being the second country to enshrine climate change policy into law (General Climate Change Law) and praised for presenting its Intended Nationally Determined Contributions to the UN’s Framework Convention on Climate Change back in March 2015. Even though renewables are strongly supported in the Law of the Electricity Industry and other legislative bodies, the constant failure to pass the Law of the Energy Transition should be taken serious at this point.