Author: Fernando Samuel Castro Alvarez
Publisher:
Published: 2016
Total Pages: 220
ISBN-13:
DOWNLOAD EBOOK →
Abstract The Mexican energy reform of December 2013 ended a long history of state-owned energy monopolies in the country, laying the grounds for direct private participation in an attempt to modernize this sector. Favorable political circumstances coupled with the negative effects of stagnation eased the way of the constitutional reform presented by the President, Enrique Peña Nieto, to Congress claiming that through this reform, the Mexican economy would grow around 1 percent by 2018 and 2 percent by 2025. The “hype” for oil spurred by the reform, was the subject of numerous media reports, academic forums and literature pieces in which every actor had a different opinion regarding who would be the main beneficiary of the “major” money flows that private investment would draw from oil developments, specially because the price for barrel of oil was around 100 dollars at the time. No one anticipated that by the end of 2014 this price would drop dramatically causing the “muteness” of these debates and shifting the government’s message from one of prosperity to one of austerity. This situation, although probably not permanent, gives us a preview of the inevitable: biophysical strains will increasingly tamper oil revenues as technically accessible fuels are depleted. Mexico needs then to pursue the de-carbonization of its economy in order to prevent a major crisis in this regard. The electricity industry has the potential to become the gateway towards this goal, providing that adequate measures are put in place to spur clean technology development. This not only to satisfy the country’s energy demands while contributing to climate change abatement, but also to create an innovation hub that can allow Mexico to compete in international markets exporting its technology around the globe. Mexico has a great capacity to satisfy its energy requirements through the deployment of renewable technologies. In terms of solar energy, 70% of its territory has Global Horizontal Irradiation Levels greater than 4.5 Kwh/m2; overall wind, geothermal, and hydropower energy potential has been estimated at 87,000MW, 8,000MW, and 53,000MW respectively; there are vast crop yielding lands available to undertake significant biomass generation efforts; and significant coastlands with considerable wave power that could make marine energy increasingly attractive in the future. Despite these promising levels, Mexico’s electricity matrix is still dominated by fossil fuels. Around 70% of the generation for public service provision is sourced through a combination of fuel oil, diesel, and natural gas, and although it is true that there have been policy efforts in the past aimed at spurring renewable energy deployment, they have mostly fallen to be “catalogues of good intentions” given that they lacked the stringency required to send the adequate price signals to promote an energy transition, as evidenced by the current electricity matrix itself. Hence, if energy transitional goals are to be pursued in order to access the benefits thereof, policy efforts that address both: technological research and development, and incentives to arouse the market, have to be developed. Task, which shall not be conducted “blindly”, but rather guided by best practices, derived from successful policy implementation examples across the world, keeping in mind the legal, economic and political viability of these policy alternatives within the Country. As such, this dissertation will provide an analysis of the framework that governed the Mexican electricity system previous to the reform, how this system is planned to work after, and the measures that this author believes Mexico should implement in order to advance in its path towards decarbonizing its finances while promoting economic growth, full electrification and climate change abatement, through an energy transition. This in light of internationally identified best practices, and taking into account feasibility considerations of the different policies available to achieve this goal within the Country.
