Mexico reform could help it hit 35% clean energy by 2024, IEA finds

Mexico’s extensive energy reform, which began in 2013, is expected to increase the share of renewables in the power sector, and slow the growth in carbon emissions, according to the International Energy Agency (IEA).

The report found that Mexico’s innovative auction system provides a substantial boost to Mexico’s clean energy efforts in the power sector.

More than half of the country’s new power generation capacity installed between now and 2040 is renewables-based, tapping Mexico’s large wind and solar resources. New investment in electricity is essential to meet rapid growth in electricity demand, and allows Mexico to reach its target of producing 35% of electricity from clean sources by 2024.

Mexico’s energy sector is being completely recast by the Reforma Energética. The reform ends the longstanding dominance of Petróleos Mexicanos (PEMEX) in oil and gas, and of the Comisión Federal de Electricidad (CFE) in the electricity sector, opening up key parts of the energy sector to new players, investment and technology, IEA said.

As a result of this major effort, Mexico’s total oil production, which has been on a sharp decline in recent years, is projected to turn a corner around 2020 and then rise to 3.4 mb/d by 2040, up almost 1 mb/d from today. The increase comes in large part from new offshore developments, including deep-water drilling.

These findings are in the Mexico Energy Outlook, part of the IEA’s World Energy Outlook (WEO) series, which examines the long-term impact of the Reforma Energética on the energy sector as well as its economic and environmental consequences.

“This is not a reform, it’s a revolution on an unprecedented scale,” said Dr Fatih Birol, the executive director of the IEA. “This transformation touches every sector of the Mexican energy industry and goes well beyond. However, let’s not underestimate the task ahead. It is a huge undertaking and there will be challenges but the reform has made remarkable progress. The government’s path forward is the right one and the IEA stands ready to assist.”

The report comes a year after Mexico took the first steps in November 2015 to join the IEA. The accession of Mexico would be a major step forward for the IEA’s new “open door” policy and allows deeper cooperation in coming years.

The International Energy Agency is the global energy authority, was founded in 1974 to help its member countries co-ordinate a collective response to major oil supply disruptions. Today IEA has three main pillars: working to ensure global energy security; expanding energy cooperation and dialogue around the world; and promoting an environmentally sustainable energy future.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.