Mexico’s president Andrés Manuel López Obrador cited oil production, hydroelectricity and a tree-planting program as pillars of his country’s climate strategy during the Leaders Summit on Climate organized by the White House.
In contrast to his fellow world leaders, López Obrador made no mention of specific emissions targets, nor did he mention wind and solar energy, carbon capture, hydrogen, or methane emissions during his remarks to the conference.
“Although we’ve discovered three large hydrocarbon deposits, the petroleum we are discovering will be destined, basically, to covering fuel demand in the internal market and we will end the practice of exporting crude and buying gasoline,” he said.
This policy will help Mexico “avoid the excessive use of fossil fuels,” he said, though he did not explain how ending oil exports would reduce fossil fuel consumption or greenhouse gas emissions.
“We are also modernizing our hydroelectric plants to reduce the use of fuel oil and coal in electricity consumption,” he said, adding “the energy produced with water is clean and cheap.” Replacing old turbines with modern equipment will allow Mexico’s hydroelectric plants to produce more energy without having to build new dams, López Obrador said.
Finally, he cited Mexico’s Sembrando Vida or “planting life” program, through which his government aims to plant some four billion trees in Mexico and Central America.
The program will allow the absorption of 70 million tons of carbon dioxide annually, said López Obrador, commonly known by his initials AMLO.
López Obrador’s nationalist energy policies have increasingly put him at odds with the international community.
He has governed on a platform of “energy sovereignty” based on “rescuing” state oil company Petróleos Mexicanos (Pemex) and state power utility Comisión Federal de Electricidad (CFE) from what he says are meddling foreign interests in the country’s energy sector.
He has effectively frozen new investment in wind and solar energy in the country, and a recent legislative reform to favor CFE over private sector generators caused an outcry from environmental groups, renewable energy advocates and business leaders in Mexico and abroad.
Pemex, meanwhile, has fallen behind its fellow Latin American national oil companies (NOCs) in pursuing environmental, social and governance (ESG) initiatives.
Brazil’s Petróleos Brasileiro SA (Petrobras) and Colombia’s Ecopetrol SA, for example, have each pledged to end routine flaring of natural gas by 2030 and to reduce the methane intensity of their operations.
Flaring by Pemex, meanwhile, increased by 68% year/year in 2020, while Pemex natural gas processing facilities are emitting methane pollutants at 10 times the rate reported by the government, according to a recent study led by the Environmental Defense Fund.
“The energy transition is gaining momentum, and NOCs are confronted with the challenge to find a balance between production of hydrocarbons and climate change and the reduction of greenhouse gas emissions,” Adrian Duhalt of Rice University’s Baker Institute for Public Policy told NGI’s Mexico GPI. “The race is on, but Pemex and the government of Mexico appear to underestimate the urge to act accordingly.” Duhalt is a postdoctoral fellow in energy studies at the Houston think-tank.
In many ways, “the strategy of Pemex is that of the sitting president, and that is a detrimental, long-standing practice followed and perpetuated by López Obrador,” Duhalt explained. “So the ESG strategy of Pemex mirrors AMLO’s approach and beliefs, prioritizing the market power of Pemex at the expense of the environment and competition.”
Not all news is bad for Pemex on the environmental front. Among sources of crude oil consumed in the United States, the greenhouse gas intensity of Mexico production is lower than average and far lower than that of Canada, the leading supplier of U.S. crude imports, said Wood Mackenzie’s Ed Crooks, vice chairman for the Americas, during an event Tuesday organized by Mexican oil and gas association Amexhi.
Mexico still cannot compete on an emissions-intensity basis, however, with deepwater production in the U.S. Gulf of Mexico or Saudi Arabia, the two least emissions-intensive sources, Crooks said.
Under López Obrador, Pemex has eschewed deepwater and unconventional development in favor of pursuing secondary recovery at its legacy onshore and shallow water fields. The government also has halted bid rounds, preventing the awarding of new exploration and production contracts to non-state companies.
“The way AMLO is trying to strengthen Pemex may serve [his] political rhetoric,” Duhalt said, “but in the medium and long run, the impact on the rest of the economy and even future generations is likely to be discouraging.”
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