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Mexico lawmakers pass controversial energy reforms

Natalia Cano
·2-min read

Mexican lawmakers have approved controversial electricity reforms which environmental campaigners see as a major setback to efforts to switch from fossil fuels to renewable energy.

The changes spearheaded by President Andres Manuel Lopez Obrador have prompted warnings that Mexico is in danger of breaching its international commitments on trade and tackling climate change.

The bill was passed in the Senate by 68 votes to 58 late Tuesday, following its approval last week by the lower house of Congress, the Chamber of Deputies.

Both are dominated by Lopez Obrador's Morena party and its allies.

The left-wing populist says the reforms are needed to strengthen the state-owned Federal Electricity Commission (CFE) and prevent power prices from increasing.

Lopez Obrador welcomed the bill's approval, saying it would help Mexico "to face difficult moments, such as what happened in Texas that had an impact on our country."

Several Mexican states suffered blackouts due to disruption to gas supplies from the United States after an unusually severe winter storm hit Texas in February.

Critics say the reforms unfairly favor fossil fuels like oil and gas over renewable energy from sources such as wind and solar produced by private firms.

"The law is a major setback for climate action and renewable energy investments in Mexico that will likely raise trade disputes under Mexico's trade agreements with the US and other nations," said Carolina Herrera of the Natural Resources Defense Council, a US-based environmental group.

Lopez Obrador's opponents plan to challenge the bill's constitutionality in the Supreme Court.

Morena's leader, Senator Ricardo Monreal, insisted during the debate that the reform "does not threaten free competition. It regulates it. It is not unconstitutional. It promotes clean energy generated by the CFE."

- 'Highly damaging' -

Environmental group Greenpeace has warned that the reform "perpetuates a highly damaging model for the environment, which does not combat, but rather promotes, climate change that the Mexican state has a constitutional obligation to fight."

Until now, the Federal Electricity Commission has been required to buy renewable energy through auctions, but the reforms end that obligation.

Business leaders have expressed concern that Mexico is in danger of breaching its trade agreement with the United States and Canada by favoring a state-run company.

That potentially risks creating frictions with the administration of US President Joe Biden, who has pledged to make tackling global warming a top priority.

The US Chamber of Commerce warned last month that the bill would "open the door for the reinstatement of a monopoly in the electricity sector and, we believe, would directly contravene Mexico's commitments" under the North American trade deal.

"Unfortunately, this move is the latest in a pattern of troubling decisions taken by the government of Mexico that have undermined the confidence of foreign investors in the country at the precise moment enhanced foreign direct investment in Mexico is needed more than ever," it added.