Mexico’s Wall of Resistance: Why AMLO’s Fight for Energy Sovereignty Needs Our Support
It has been more than two years since Andrés Manuel López Obrador (known as “AMLO”) began his six-year term as the president of Mexico. His Movement for National Regeneration (“Movimiento de Regeneración Nacional” in Spanish, or MORENA), swept to victory in the general election of July 1, 2018. In a country where the left has for a long period been directionless, divided, and excluded from power, MORENA’s margin of victory 53 percent in the first round—was decisive.[1]
MORENA took the helm when both domestic and international business interests had for some time seen partners in an aggressive effort to further advance the privatization of oil and electricity. A top priority for AMLO has been to challenge the neoliberal privatization agenda (“energy reform”) that the previous president, Enrique Peña Nieto, pursued with sycophantic fervor during his term of office (2012-2018). In 2013-2014, his administration made more than twenty legislative changes and three amendments to the Mexican Constitution to allow for non-Mexican companies to own and invest in the country’s energy resources.[2] The reforms aimed to restructure Mexico’s state-owned energy companies—principally the power utility Comisión Federal de Electricidad (CFE) and the public oil company, Petróleos Mexicanos (PEMEX). Peña Nieto also welcomed renewable energy multinationals, guaranteeing their profits and burdening the CFE with additional costs.
During his campaign, AMLO said he planned to restore Mexico’s energy sovereignty. Following his election, the government took measures to restore PEMEX and CFE as preeminent public institutions. However, AMLO went further. In early 2019, his government postponed the scheduled renewable energy auctions, thus imposing an indefinite moratorium on new wind and solar projects.
A top priority for AMLO has been to challenge the neoliberal privatization agenda (“energy reform”) that the previous president, Enrique Peña Nieto, pursued with sycophantic fervor . . .
Across the international left, the Mexican government’s current obstruction of neoliberal “energy reform” has thus far generated no perceptible excitement. For some, AMLO is simply too moderate and MORENA too tied to the established political class.[3] Some criticized AMLO for pandering to Trump over the new NAFTA treaty—United States-Mexico-Canada Agreement (USMCA) or T-MEC in Mexico—and for being slow to recognize Biden’s 2020 election win. And the recent events in the Americas, such as the inspiring mass protests in Chile that forced a plebiscite and the drafting of a new constitution, and the return to power of the main left party in Bolivia perhaps make a bunch of regulatory changes to Mexico’s energy system seem pretty innocuous by comparison.
It is, however, anything but. What is happening in Mexico’s electricity sector could set an enormously important precedent in the struggle for climate protection. As we will see, today there is an international campaign being conducted against AMLO by North governments, energy multinationals, and green groups. The goal of this campaign is to pressure AMLO to continue the process of privatization and to protect the investments of private energy companies.
The nature of the campaign against AMLO provides a clue to the significance of the government’s stance. Perhaps more than any other national government, AMLO’s administration is holding the line against the further privatization of the country’s oil and electricity systems. Designed by the IMF and the World Bank, the privatization agenda is framed by concerns about climate change and the need for “decarbonization.” But these concerns have become pretexts for the same anti-public and socially regressive “structural adjustment” agenda that was inflicted upon the Global South during the 1980s and 1990s. Put differently, in Mexico and in scores of other countries, climate concerns have been used to legitimize the drive to convert public energy into a source of guaranteed profits for private companies.
Resource Nationalism?
But readers may ask: How can protecting public entities that are either, in the case of PEMEX, a large producer of oil and petroleum products or, in the case of CFE, a large user of gas to generate electricity somehow be good for the climate? And how are canceling future renewable energy projects and imposing charges on wind and solar companies anything but massive steps in the wrong direction? At first glance, AMLO’s energy policy seems revanchist: an expression of a “resource nationalism” no different, at the end of the day, from that of Russia, Saudi Arabia, or, for that matter, the United States. According to the Center for Economic and Policy Research (an important U.S.-based progressive think tank), “The [MORENA] administration seems bent on a fossil-fuel future, which is no future at all.”[4]
But this assessment fails to consider a number of current realities. As with most major economies, Mexico’s dependence on fossil fuels is not a matter of choice or “addiction.” Approximately 85 percent of Mexico’s energy consumption is provided by oil and gas. It imports large amounts of gas from the United States, most of it for power stations. It produces a little under 2 percent of the world’s oil, and production levels have been declining for years. Today Mexico exports a significant amount of crude oil, but it is a net importer of refined petroleum products.[5]
At first glance, AMLO’s energy policy seems revanchist: an expression of a “resource nationalism” . . .
For now, Mexico has a choice: It can either produce and refine more oil domestically and thus reduce its imports, or it can reduce domestic production and refining, and increase imports. Put differently, no amount of wind and solar power is going to replace the need for oil and petroleum. Reducing dependence on the latter will require economy-wide electrification of transport, as well as heating and cooling systems. This is a decades-long process that will require the development of technologies (battery storage, for example) and supply chains over which Mexico currently has no meaningful control. And if Mexico is to decarbonize its electricity system, it will need to do much more than just install windmills and solar panels willy-nilly. The national grid must be upgraded, and the entire system must be honed to deal with increasing levels of variable or intermittent renewable energy generation. These realities lie at the heart of the global challenge to move away from fossil fuels.
When viewed in this light, the current government’s actions are therefore far more important than the meaningless on-paper commitments on decarbonization made by Peña Nieto. AMLO’s actions have exposed both the duplicity and hypocrisy of the neoliberal “green structural adjustment” agenda, which uses climate arguments to legitimize energy privatization and profit-making, but which produces outcomes that are invariably chaotic, regressive, and ultimately ineffective. If successful, the fight for energy sovereignty in Mexico opens up a range of possibilities for a pro-public energy transition. By reasserting the need for energy planning with the state at the center, the government can begin to create a platform for an approach to climate protection that is liberated from the concerns of investors, is more socially just, and is ultimately more effective in terms of reaching climate targets.[6]
. . . [T]he fight for energy sovereignty in Mexico opens up a range of possibilities for a propublic energy transition.
Of course, this may not happen. If it is successful in winning the sovereignty fight, AMLO’s government may decide to develop the country’s offshore oil potential. It may also continue to increase the amount of cheap gas it imports from the United States. Or it could develop a publicly owned renewables program. In fact, all three of these options might be pursued simultaneously.
For now, the Mexican government is not trying to present itself as a climate champion, but neither is it downplaying climate concerns. There are significant signs that the government is considering a pro-public approach to energy transition, but a lot will depend on whether it will be given the space to do so. Powerful forces are intent on making sure AMLO is stopped before others start to think and act along similar lines.
Predictably, green groups are angry at AMLO for the cancelation of new renewable energy projects. Greenpeace won a series of injunctions leading to a Supreme Court ruling that has suspended the implementation of Energy Ministry proposals to prevent a number of private wind and solar projects from connecting to the national power grid owned by the state-run CFE. The Court’s decision puts any serious moves to counter the effects of the neoliberal reform on hold, at least for now.[7]
Paint by Numbers
In Mexico, electricity sector privatization actually began in 1992 under the Salinas administration. Consistent with the neoliberal instruction manual, Salinas gave legal space to private gas companies to generate power by way of longterm power-purchase agreements (PPAs). Typically, these agreements obligate a government or a national utility to purchase power from private energy companies at a pre-agreed rate. While antithetical to any recognizable notion of “market competition,” PPAs lock in revenues and returns for private energy companies for fifteen to twenty-five years. Three more presidents and twenty years later, Enrique Peña Nieto was elected president for a six-year term beginning in 2012. Peña Nieto appeared delighted in his role as poster child for what neoliberals call “the standard model” of power sector privatization.[8] The Energy Transition Law of 2013 determined that PEMEX and CFE would be converted from “state-owned enterprises” to “state productive enterprises.” CFE would be “unbundled” (i.e., broken up, a typical step in the process of privatization). The portfolios of PEMEX and CFE—which previously included ensuring the country’s energy security—were revised to focus on “value creation.”[9] In other words, both PEMEX and CFE were expected to become profit-making companies.
. . . [G]reen groups are angry at AMLO for the cancellation of new renewable energy projects.
As if to illustrate how climate change concerns have been used to strengthen the case for privatization, Peña Nieto’s government passed the General Climate Change Law in April 2012, which committed Mexico to reducing emissions growth by 30 percent by 2030 (50 percent by 2050), obtaining 35 percent of its energy from renewable sources by 2024. Peña Nieto then proceeded to follow the neoliberal script when it came to the promotion of renewable energy.[10] Wind and solar companies were invited to bid for PPA contracts with little regard to whether the power was actually needed, or whether the national grid was able to handle the impact of rising levels of “intermittent” or “variable” generation—an issue that is becoming a major problem in country after country where the “build and sell” PPA model has been applied.[11] This has now become MORENA’s headache.
Peña Nieto’s reform also put in place what neoliberals call an Independent System and Market Operator (lSMO) for the power sector, known as, in this instance, the Centro Nacional de Control de Energía, or CENACE.12 ISMOs are a crucial component in the World Bank’s privatization toolbox, and their role is to both enforce and police the liberalization process. CENACE took away control of the national grid from the public utility, CFE. Its stated role was to ensure that there is a “nondiscriminatory and open access to the national grid.”[13] In other words, private companies would have access to the public grid without having to pay for the privilege.
From the standpoint of big business, Peña Nieto’s reform was a spectacular achievement.[14] According to the Washington-based Wilson Center, “The reforms were truly historic, profound and highly ambitious.” But AMLO has since become a threat to the “modernization” of Mexico’s energy system, and “Now we must evaluate what the political future holds for the reform and those who have invested so heavily in it.”[15]
Energy Sovereignty
Given the zeal with which Peña Nieto attempted to implement the privatization agenda, AMLO’s effort to impede the process is itself quite remarkable. During his campaign, AMLO had called for a national plebiscite or referendum on the energy reform. Peña Nieto warned that any attempt to prevent the process of energy reform, “is practically to make disappear the investments that today require certainty . . . We want the private sector to invest, for it to generate returns for Mexico and its people.”[16] Once elected, AMLO took a number of steps to bolster PEMEX and CFE. The systems operator (CENACE) was brought into line, and he replaced Peña Nieto’s energy regulators with his own team.[17]
Meanwhile, Energy Minister Rocío Nahle García has put the spotlight on some of the problems created under Peña Nieto that the current government needed to be addressed. In April 2020, her office developed a series of proposals that could reverse the main effects of the Peña Nieto reforms without actually changing the law.[18] The proposals gave the Ministry discretionary powers to decide which projects be granted priority status with respect to their connection to the grid. Any contracts with private concerns must, indicated the Ministry, also include the possibility of early termination.[19]
The Ministry canceled the building of some transmission lines that were needed to connect wind and solar projects to the national grid. It also ruled that, in the future, wind and solar companies would need to fully cover their own transmission costs. Now led by AMLO appointees, another “independent” body set up under the supervision of the World Bank—the Energy Regulatory Commission (CRE)—supported Nahle García and approved an increase in transmission charges—previously only nominal—of up to 800 percent.[20]
AMLO’s Memo: Ending the Policy of Pillage and Surrender
Peña Nieto had been fond of pointing to the billions of dollars in investments that his reforms generated. The three rounds of wind and solar auctions (2016-2019) produced $9 billion in investments, mostly from foreign companies.[21] But the PPA model has had the same impact on investors as a honey pot has on bees. PPAs guarantee returns on investment to private companies and developers. But what comes in through the front door in terms of investment in building new generation capacity is overshadowed by what goes out the back door in the form of long-term electricity costs.
On July 22, 2020, AMLO sent a memorandum to “Public Servants and Members of Energy Sector Regulatory Bodies.”[22] The memo’s contents are very revealing. Referring to Peña Nieto’s reform as a “policy of pillage,” AMLO wrote,
We soon learned the result of this robbery and its corresponding deception: nothing was gained by the nation, everything was translated into lucrative business for private companies and corrupt politicians. . . It is time to correct the course of the policy of surrender that has been imposed on the energy sector.[23]
He reiterated that PEMEX and CFE were “strategic and indispensable for the independent and sovereign development of our nation.” This, he wrote, “translates into not continuing with the privatization of the energy sector” and “putting a stop to juicy private business . . . The granting of subsidies of any kind to private companies in the energy sector should be abolished.”[24] Importantly, AMLO warned that CENACE, the regulatory Commission (CRE), and other purportedly “independent” bodies must not become “servile scaffolding for the benefit of the private sector.” The power utility CFE, said AMLO, “was left almost in ruins: indebted, with its productive capacities reduced [and] subject to regulation that privileges individuals in the implementation of the energy reform. The deep-rooted vices of inefficiency, corruption and waste were preserved.”[25]
Minister Nahle’s “Khruschev Moment”
On October 26, 2020, Minister Nahle García gave a three-hour presentation to Mexico’s Senate that, in the world of energy and climate policy, deserves to have the same impact as Soviet leader Nikita Khruschev’s 1956 speech on the personality cult around Stalin. Her presentation laid bare how the Peña Nieto reforms have damaged Mexico’s energy system, and particularly its electricity sector.[26]
Those who are quick to accuse AMLO of waging war on renewable energy should take a long and careful look at the Minister’s numbers. She pointed out that the country’s maximum demand for electricity has never exceeded 47 gigawatt hours (GWh) on any given day. But, following Peña Nieto’s orders, the Regulatory Commission (CRE) had granted enough permits to private generators to increase supply to 84 GWh. The main story behind the technical language is this: under Peña Nieto, Mexico had issued permits that would generate electricity far in excess of what is actually needed. At which point Nahle asked, if the network can only hold 47 GWh, why were all of these permits granted? “This is a clear lack of planning in previous governments” that, she said, revealed “enormous regulatory gaps in the [electricity] sector.”[27] More than this, the laws passed under Peña Nieto are such that private companies benefit from twenty-five-year PPAs that CFE are legally obligated to honor.
Nahle also questioned the role of CENACE in not maintaining the stability of the grid. Because wind turbines and solar panels generate power intermittently, electricity floods into the grid during sunny and windy periods, and then—as weather conditions change—the opposite can occur, and back-up power needs to be rapidly deployed to maintain supply. In 2019, said Nahle, there were seventy-three “states of emergency,” and an additional thirty-two in the first half of 2020. Dealing with this instability requires upgrades to the grid. But private renewable companies have consistently insisted that responsibility for grid upgrades should lie with anyone but them.
In Mexico and elsewhere, renewable energy companies and environmental groups have tended to downplay the technical challenges as well as financial costs of integrating variable wind and solar power, and they have dismissed Rocio Nahle’s concerns as a flimsy excuse to restore CFE to its monopolistic glory. But it has become widely recognized that grid upgrades need to accompany the introduction of variable renewable energy and, if they do not, then the stability of the entire system will become compromised. Maintaining stability also incurs costs.[28] This is indisputable. According to the International Energy Agency, “system costs” can add somewhere between 15 and 25 percent per unit of installed capacity.[29]
Thus the moratorium on new wind and solar projects is not a “war on renewables” after all. It is a necessary measure to halt the unplanned increase in generation capacity that is not needed to meet existing demand; to limit the proliferation of PPA contracts that would obligate CFE to purchase power for twenty-five years; and to slow the rise of additional “system costs” associated with the needed upgrades to the grid.
Green Groups and Business Unite to Stop AMLO
AMLO’s moves to counter the “pillage and surrender” effects of Peña Nieto’s reforms and to defend public energy have provoked broad opposition. In May 2020, the Business Coordinating Council of Mexico denounced the government’s new regulations as representing “A frontal attack on legal security for investments in Mexico” leading to “the loss of jobs and investor confidence.” The proposed changes meant that the government could “arbitrarily displace any private sector power generation project.”[30]
Unfortunately, key environmental groups have been very active in the anti-AMLO effort.[31] Echoing the Wall Street Journal’s OpEd “Mexico’s Assault on Energy Investors,” they have lamented the threat to investment in renewables and expressed concern that AMLO’s actions will mean that Mexico will not meet its renewable energy targets.[32] This is despite the fact that the government has said it would honor the targets adopted by the Peña Nieto government, and also honor the PPA contracts negotiated with renewable energy companies.
Greenpeace Mexico has led the domestic legal opposition to AMLO.
One green anti-AMLO entity is “Ren Mx”—an openly pro-business World Wildlife Fund initiative that “works to accelerate Mexico’s energy transition” by appealing to foreign investors.[33] Luis Romero, a renewable energy specialist with Ren Mx until February 2020 before he became Commercial Manager at Aila Energy, summed up what is at stake in Mexico’s energy sovereignty battle: “The [MORENA] administration is trying to do energy policy through state institutions, and not through the institutions created for that purpose.”[34] The institutions “created for that purpose” refer to the entities set up to enforce Peña Nieto’s privitazation agenda, such as CENACE and the CRE.
Greenpeace Mexico has led the domestic legal opposition to AMLO. In late June 2020, the Mexican Supreme Court granted the injunction and provisionally suspended the government’s proposed changes, which included the Ministry’s plans to develop a publicly driven energy transition through the Sectorial Energy Program (PROSENER 2020-2024).[35] On November 19, 2020, the same Court upheld the injunction. Greenpeace tweeted, “We won! This is a legal victory that favors the whole population because it protects health and the environment.”[36]
AMLO’s attempts to make changes “within the law” had, at this point, hit a green wall. The actions of major North-based green groups amount to support—either de facto or intentional—for the privatization agenda. Many green groups claim to have an agnostic approach to who owns and controls energy. According to Pablo Ramírez from Greenpeace Mexico, “We have no particular interest . . . how renewable energy is generated, whether it is public or private.”[37] Perhaps Greenpeace does not have an interest, but millions of Mexicans certainly do.
Freaked Out
But the opposition to AMLO’s policy goes far beyond the large North-based green nongovernmental organizations (NGOs). In May 2020, the Canadian government and the European Union had, along with their respective Chambers of Commerce, registered protests to Minister Nahle García. Reuters described the protests as a “highly unusual diplomatic intervention.” Canada’s ambassador-designate to Mexico said the Minister’s policy changes “attack investment in renewable energy in the country.”[38] According to Duncan Wood of the Wilson Center, the changes signal that “They [MORENA] do not welcome private investment in the energy sector and that they don’t really care what international investors think.”[39] Investors, he said, “are more than a little bit freaked out by what’s happening right now.”[40]
Adding more pressure on MORENA, in late September 2020, Moody’s changed the outlook on the North American Development Bank (NADB) to “negative.” The primary reason for the change was, said Moody’s, the “proposed regulatory changes in Mexico that would be detrimental to the renewable energy sector.” Moody’s claimed the new regulations allowed the government “to give preference to hydrocarbon [gas and oil] . . . the proposed changes will materially discourage future investment in the renewable energy sector.”[41]
U.S. Pressure Builds
External moves to undermine AMLO continue to grow. On October 22, 2020, more than forty members of the U.S. Congress, including eleven House Democrats, sent a letter to then President Trump that MORENA’s actions, they said, “violate and contradict the spirit, if not the letter, of the USMCA and demonstrate a pattern of obstruction.” The letter urged Trump to work to restore conditions that provided “certainty and fairness for U.S. companies operating in Mexico.”[42] Led by Texas Senator Ted Cruz, the signatories were primarily concerned with how AMLO’s decision to reassert state control over oil and gas exploration and development could put at risk U.S. investments in those markets.
Green groups should . . . recognize that both their “renewables by any means necessary” and their agnostic approach to the “public vs. private” question is politically naive.
AMLO’s government is also vulnerable to the legal challenges under the Investor State Dispute Mechanism (ISDM) under USMCA or T-MEC. The ISDM gives corporations the right to sue governments for lost profits in the event of any change in domestic policy that might reduce or eradicate those returns.[43] Alluding to possible legal action, former U.S. Secretary of State Mike Pompeo and other Trump administration officials chimed in. A January 11, 2021, letter to the Mexican government stated that AMLO’s actions “affect several U.S.-backed private sector projects in the energy sector; these measures would negatively affect investments of hundreds of millions of dollars.” They complained that Mexican energy regulators have been instructed to “block permits for private sector energy projects and exercise their regulatory authority to favor state-owned companies.
If this is true, it would be deeply troubling and raise concerns about Mexico’s commitments under the T-MEC.”[44]
A Public Pathway?
Clearly, there is a lot at stake in AMLO’s fight for energy sovereignty. Green groups should reflect not just on the consequences of their own action —which today serve the interests of corporations and governments of the Global North, including the United States; they should also recognize that both their “renewables by any means necessary” and their agnostic approach to the “public vs. private” question are politically naive. Instead, they, and the broader left, should support AMLO and use their considerable resources to demonstrate how a pro-public approach to energy transition can offer a viable alternative to the chaos caused by the “privatize to decarbonize” approach.
. . . [I]f AMLO does not prevail, then the neoliberal “privatize to decarbonize” agenda will continue to be pursued in a manner that is socially regressive and ecologically ineffective.
There are signs that the Mexican government is open to discussions on how to manage the energy transition differently. In July 2020, the Energy Ministry (SENER) released the government’s Sectorial Energy Program (PROSENER 2020-2024). Among other things, PROSENER is considering the possibility of direct public financing of renewable energy through the national energy utility, CFE.[45] Nahle said, “How much does renewable energy cost us? A lot. End consumers get the benefit—but we want to do this through CFE. Private companies install, and then they leave. CFE can
carry out the installations and provide maintenance.” She continued, “All countries are engaging in an energy transition—just like us—we will still depend for some time on fossil fuels. So our transition will be gradual…while we take care of the network and national [energy] security.”[46]
But to have any chance of developing this alternative approach, the government must prevail in its immediate effort to fight off the legal and political challenges it confronts. Undeterred by his defeat at the hands of the Supreme Court the previous November, on February 1, 2021, AMLO sent to the Congress a bill to reform the Electricity Industry Law to give priority to the dispatch of electricity produced by the state through the CFE. The bill proposes to review the PPA system and the role of private energy companies which “have caused great damage to CFE’s assets” and to eliminate the obligation to purchase energy through auctions. The goal of the bill, said AMLO, is to put an end to “years of plundering.”[47] AMLO told Congress that Peña Nieto had “granted full legal coverage to the neoliberal policy that imposed a privatization process to weaken and [then] transfer public companies to private individuals.”
So the struggle for control of Mexico’s energy system continues. If AMLO prevails, a pro-public approach to energy transition, while by no means guaranteed, becomes a distinct possibility. But if AMLO does not prevail, then the neoliberal “privatize to decarbonize” agenda will continue to be pursued in a manner that is socially regressive and ecologically ineffective.
According to AMLO, “We are not going to give in on this issue, because we have to defend the public interest, the people, the nation.”[48] The left—and that includes many environmental groups—needs to rally behind AMLO in what could turn out to be a watershed moment in the direction of global energy and climate policy.
Notes
1. See https://www.bbc.com/mundo/noticias-america -latina-44678664.
2. See https://www.bakerinstitute.org/media/files/files/b7ccc9ca/mex-pub-mextradeamlo-041919.pdf.
3. Writing in The Nation in August 2018, Madeleine Wattenbarger, said Andrés Manuel López Obrador (AMLO), “may not be the leftist messiah many make him out to be.” The article documented AMLO’s past and interviewed many on the left who, at that time, expected little from then newly elected president. In September 2020 writing for Dialogo Chino, Wattenbarger noted how Peña Nieto’s reform “dislodged the monopoly that the Mexican state had previously held over energy production, distribution and commercialization. It opened the gates for private investment in the energy sector, including in renewables. The 2015 Energy Transition Law set policies in place for the country’s transition to clean energy.” See https://www.thenation. com/article/archive/what-does-the-mexicanleft-think-of-mexicos-leftist-president-elect/; see “Mexico Blocks Private Renewable Energy Expansion,” Diálogo Chino, September 7, 2000, available at https://dialogochino.net/en/climate-energy/37327-mexico-blocks-privaterenewable-energy-expansion/.
4. According to Laura Carlson of CEPR, “The issue is not really foreign investors versus public good, or even the specifics of the reforms, but rather the lack of sustainability and the poorly thought out consequences of the sudden change in the rules of the game for investors, primarily investment funds beholden to shareholders. Mexico is not on the path to fulfill its commitment to move to 35 percent renewables by 2024.” See https://www.thedialogue.org/analysis/is-lopez-obrador-upending-the-powersectors-landscape/.
5. See https://www.eia.gov/international/analysis/country/MEX.
6. MORENA has also canceled the Mexico City airport expansion, auctions for the exploration of oil and gas fields, and plans to renegotiate some long-term gas pipeline contracts. See https://www.shearman.com/perspectives/2020/05/recent-regulatory-developments-in-the-mexican-power-sector?sc_lang=de-DE, See also:Luis Pazos, “Santa Lucía o Texcoco. Pérdidasy Ganancias,” Centro de Investigaciones Sobre la Libre Empresa, September 2020, at 12, available at https://cisle.org.mx/santalucia-o-texcoco-perdidas-y-ganancias/; Revista Expansión, “El Gobierno de AMLO cancela la cuarta subasta eléctrica,” Revista—Expansión, February 1, 2019, available at https://obras. expansion.mx/infraestructura/2019/02/01/elgobierno-dcancela-la-cuarta-subasta-electrica; Arturo Solis, “El gobierno de AMLO cancela subastas petroleras pendientes,” Forbes México, December 11, 2018, available at https://www.forbes.com.mx/el-nuevo-gobierno-cancela-lasultimas-subastas-petroleras/#:~:text=La%20Comisi%C3%B3n%20Nacional%20de%20Hidrocarburos,petroleras%20pendientes%203-.2%20y%203.3.&text=Ambos%20procesos%20de%20subastas%20hab%C3%ADan,nueva%20administraci%C3%B3n%20organizara%20ambas%20licitaciones.
7. See https://www.proceso.com.mx/nacional/2020/9/24/greenpeace-obtiene-suspensiondefinitiva-contra-prosener-plan-energetico-dela-4t-249868.html, https://renewablesnow.com/news/greenpeace-secures-victory-in-legal-battle-for-mexicos-renewables-701062/.
8. Vivien Foster and Anshul Rana, Rethinking Power Sector Reform in the Developing World (Washington, DC: World Bank, 2020). The report concluded that, after almost three decades, only about a dozen developing countries have been able to implement the full privatization model. “Many of those who have adopted the (neoliberal) reforms have done so selectively, leading to a situation where elements of market orientation coexist with a strong state presence, something the designers of the 1990s model did not anticipate.”
9. International Energy Agency (IEA), Mexico Energy Outlook, World Energy Outlook Special Report (Paris: Organisation for Economic Co-operation and Development [OECD]/IEA, 2016), available at www.iea.org/publications/freepublications/publication/MexicoEnergyOutlook.pdf.
10. In April 2012, under the Calderón administration, legislators passed the General Climate Change Law that committed Mexico to reducing emissions growth by 30 percent by 2030 (50 percent by 2050), obtaining 35 percent of its energy from renewable sources by 2024. See UNFCCC, Mexico: Intended Nationally Determined Contribution. https://www4.unfccc.int/sites/submissions/INDC/Published%20Documents/Mexico/1/MEXICO%20INDC%2003.30.2015.pdf.
11. “Build and Sell” is my term to illustrate how the primary goal of private power generators is to build capacity and then sell power via a power purchase agreement (PPA). This ring-fences the private companies from having to concern themselves with grid upgrades and balancing. See: Energy Institute at Haas, “The Renewable Energy Auction Revolution,” August 7, 2017, available at https://energyathaas.wordpress.com/2017/08/07/the-renewable-energy-auction-revolution/.
12. CENACE stands for National Energy Control Center.
13. Wilson Center, “Mexico’s New Energy Reform,” 48.
14. “Mexico’s efforts to phase out and rationalize its fossil-fuel subsidies: A report on the G20 peer-review of inefficient fossil-fuel subsidies that encourage wasteful consumption in Mexico,” Executive Summary, http://www.oecd.org/fossil-fuels/Mexico-Peer-Review.pdf.
15. Wilson Center, “Mexico’s New EnergyReform,” 4.
16. See https://www.reuters.com/article/us-mexicooil/mexican-president-defends-energy-reformfrom-leftists-attacks-idUSKBN1GZ0DU.
17. “Director of Mexico’s Electric Grid Operator Steps Down,” Bnamericas, September 24, 2020, available at https://www.bnamericas.com/en/
news/director-of-mexicos-electric-grid-operator-steps-down. “Investors Wary as AMLO Slowly Dismantles Mexican Energy Reforms,” World Oil, January 23, 2020, available at https://www.worldoil.com/news/2020/1/23/investorswary-as-amlo-slowly-dismantles-mexicanenergy-reforms.
18. See https://dialogochino.net/en/climateenergy/37327-mexico-blocks-private-renewable-energy-expansion/ “The main actions of AMLO’s government include: 1.) suspending the interconnection of renewable projects during the pandemic, 2.) altering the grid dispatch order based on economic merit, favoring CFEowned assets, 3.) suspending and further canceling ongoing and future public tenders for long-term and medium term PPAs for renewable energy, 4.) changing rules governing clean energy certificates to allow CFE to earn certificates from legacy facilities, 5.) changing the wheeling charges applicable to legacy renewables projects and 6.) creating a new (but yet to be defined) category of ancillary costs payable by market participants.”
19. Centro Nacional de Control de Energía or (CENACE) Market Information System (Sistema de Información de Mercado) the “Order to guarantee the efficiency, quality, reliability, continuity and security of the National Electric System, on the occasion of the recognition of the epidemic of disease caused by the SARSCoV2 virus (COVID-19)” See: https://www.hklaw.com/en/insights/publications/2020/05/analysis-of-applicable-provisions-to-renewable-energies-in-mexico; https://www.forbes.com.mx/renuncia-el-presidente-de-la-cre-trasmeses-de-conflicto-con-amlo/.
20. See https://www.ibanet.org/Article/NewDetail. aspx?ArticleUid=A3E8ABFB-D9FC-40AD-9E35-F970430E3E47.
21. Wilson Center, “Mexico’s New Energy Reform,” 102-22.
22. Memorandum, from Andrés Manuel López Obrador, President of Mexico to Public Servants and Members of Energy Sector Regulatory Bodies. https://www.bnamericas.com/en/analysis/amlo-memo-seen-as-threat-to-investmentin-mexicos-energy-sector.
23. Ibid.
24. Both in oil extraction and refining, as well as in electric power generation, partnerships with private investors will not be ruled out, as long as they are complementary actions and do not affect the national interest.
25. Memorandum, from Andrés Manuel López Obrador, President of Mexico to Public Servants and Members of Energy Sector Regulatory Bodies. https://www.bnamericas.com/en/analysis/amlo-memo-seen-as-threat-to-investmentin-mexicos-energy-sector.
26. Transcript of Minister Nahle’s speech (in Spanish) http://comunicacion.senado.gob.mx/index.php/informacion/versiones/49520-presentaciondela-ingeniera-rocio-nahle-garcia-secretaria-deenergia-al-comparecer-ante-la-comision-de-energia-del-senado-de-la-republica-en-el-marco-dela-glosa-del-segundo-informe-de-gobierno.html. See also: https://www.youtube.com/watch?v=FVUSWglcvxc&feature=youtu.be (also in Spanish).
27. Ibid. See also: https://base.energia.gob.mx/dgaic/DA/P/SubsecretariaElectricidad/ConjuntosProyectosInversion/SENER_07_ProgramaDesarrolloSistemaElectricoNacionalPRODESEN-2019-2033.pdf.
28. “Proposed Solar Fee Raises Questions about Who Pays for Grid Upgrades,” available at https://vtdigger.org/2019/06/02/proposed-solarfee-
raises-questions-pays-grid-upgrades/.
29. See, for examples: IEA, “Getting Wind and Sun onto the Grid: A Manual for Policy Makers,” Technical report, 2017; B. P. Heard, B. W. Brook, T. M. L. Wigleya, and C. J. A. Bradshaw, “Burden of Proof: A Comprehensive Review of the Feasibility of 100% Renewable-Electricity Systems,” Renewable and Sustainable Energy Reviews 76 (2017): 1122-33, available at http://dx.doi.org/10.1016/j.rser.2017.03.114.
30. See https://www.sandiegouniontribune.com/business/nation/story/2020-05-17/mexico-citesvirus-in-slapping-down-renewable-energy, https://www.cofece.mx/CFCResoluciones/docs/Opiniones/V132/28/5125826.pdf.
31. See https://www.evwind.es/2020/05/23/greenpeace-questions-mexico-for-closing-the-wayto-wind-energy/74840, https://dialogochino.
net/en/climate-energy/37327-mexico-blocksprivate-renewable-energy-expansion/.
32. See https://www.rechargenews.com/transition/renewables-shock-as-mexico-scraps-cleanenergy-tender/2-1-534222; Wall Street Journal, https://www.wsj.com/articles/mexicos-assaulton-energy-investors-11605476282.
33. See https://www.youtube.com/watch?v=yGQUWzfYQW0.
34. See https://www.rechargenews.com/transition/greenpeace-slams-mexican-climate-climbdown-under-amlo/2-1-565866.
35. English summary: https://www.whitecase.com/publications/alert/energy-sector-program-2020-2024. See also: https://www.hklaw.com/en/insights/publications/2020/05/analysis-of-applicable-provisions-to-renewableenergies-in-mexico.
36. See https://twitter.com/greenpeacemx/status/1329586444197912579?s=08.
37. See https://dialogochino.net/en/climate-energy/37327-mexico-blocks-private-renewableenergy-expansion/.
38. “Energy Dispute Deepens between Mexico andForeign Allies,” Reuters, May 16, 2020, available
at https://www.reuters.com/article/us-mexico-energy/energy-dispute-deepens-between-mexico-andforeign-allies-idUSKBN22S0 T8.
39. Ibid.
40. See https://www.wilsoncenter.org/event/theoutlook-for-mexicos-energy-sector-underthe-amlo-administration.
41. See https://www.moodys.com/research/Moodys-changes-the-outlook-on-North-American-Development-Bank-NADB-PR_431674.
42. See https://gonzalez.house.gov/media/pressreleases/congressman-gonzalez-leads-letterpresident-trump-barriers-market-access-us.
43. See https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=A3E8ABFB-D9FC-40AD-9E35-F970430E3E47. Of this writing, no ISDM cases have been filed as a result of the Energy Ministry’s actions. See: https://investmentpolicy. unctad.org/investment-dispute-settlement/ country/136/mexico/investor. AMLO, however, seems less concerned: “There are matters that are not part of the treaty [UMSCA] because they have to do with Mexico’s sovereign domain, as is the case of the energy sector. Despite the fact that the intention was to integrate oil issues, to involve Mexican oil in the treaty, both the government of Canada and the government of the United States were convinced that, in this matter, we adhere to the Constitution, to Article 27, on the exclusive domain of the nation over these natural resources and this approach was respected.” https://lopezobrador.org.mx/2020/11/11/version-estenografica-de-la-conferencia-deprensa-matutina-del-presidente-andres-manuel-lopez obrador-415/.
44. “EU reclama discriminación energética de México,” Energia a Debate, January 15, 2021, available at https://www.energiaadebate.com/ regulacion/eu-reclama-discriminacion-energetica-de-mexico/.
45. English summary: https://www.whitecase.com/publications/alert/energy-sector-program-2020-2024.
46. English summary: https://www.whitecase.com/publications/alert/energy-sector-program-2020-2024.
47. La Jornada, February 1, 2021, AMLO sends initiative that gives priority to CFE in electricity dispatching, https://www.jornada.com.mx/notas/2021/02/01/politica/envia-amlo-al-congreso-iniciativa-de-reforma-a-ley-de-la-industria-electrica/.
48. AMLO responde a legisladores de EUA: defiendo los intereses públicos, no de las empresas, https://www.lavozdemichoacan.com.mx/pais/amloresponde-a-legisladores-de-eua-defiendo-losintereses-publicos-no-de-las-empresas/.
Author Biography
Sean Sweeney is the director of the International Program for Labor, Climate & Environment at the School of Labor and Urban Studies, City University of New York. He also coordinates Trade Unions for Energy Democracy (TUED), a global network of sixty-four unions from twenty-two countries. TUED advocates for democratic control and social ownership of energy resources, infrastructure, and options.