Environmental Impacts of Mexican Energy Reform

Report
José Juan González Márquez
Universidad Autónoma Metropolitana
I.
Introduction
1.
2.
3.
4.
5.
6.
In 2013 an important Constitutional reform was passed in
Mexico by Federal Congress and 31 Local Congresses.
The reform makes possible new schemes of private
participation in Energy Sector.
Secondary
legislation
implementing
constitutional
amendment is currently being discussed by Federal Congress.
It focuses more on hydrocarbons than on renewable sources of
energy.
It includes few but insufficient environmental considerations.
Environmental regime could result inefficient to deal with
negative environmental impacts resulting from new and more
intensive activity in energy sector
I. New Schemes for private
investment
 By 2013 Mexican constitution forbids private participation
in energy sector (oil and electricity industries).
 In nineties secondary legislation was modified to open up
opportunities for private companies:
 Oil sector:
 contracts of multiple services (PEMEX with Private companies)
 Activities of transport and storage of natural gas were privatized
 Electricity:
independent producer of energy (private
companies generates electricity to complement Energy
generated by CFE). They can not sell electricity directly to
consumers.
Strategic character of Energy Sector
 Mexico is a carbon based economy
Oil Industry is the main source of revenue
 Electricity industry is fully integrated to north and
central American markets.
 Energy sector is the main generator of:


regional and national development
social welfare( CFE and PEMEX: 270 000 employees)
Why an energy reform?
 Mexican energy sector start losing self-sufficiency:




Mexico passed from exporter to importer of gasoline and natural gas.
Poor development of renewable sources of energy.
Oil reserves started to decline.
Importing natural gas made electricity more expensive.
 PEMEX supported a heavy tax regimen
 Energy sector required investments that PEMEX and CFE can not afford.
 Exploration and exploitation of shale oil/gas and hydrocarbon resource
placed in deep waters of Gulf of Mexico required technologies that PEMEX
did not have.
 So, private investment was seen as the best solution to maintain Mexican oil
production in the level it had at the end of XX Century.
What the reform consist of?
 Constitutional reform of 2013.
 reduces the state monopoly just to exploration and
exploitation of hydrocarbons but:


Makes possible private participation in all those activities trough
contracts
Any other activities of oil industry were privatized.
 Reduces the state monopoly just to transmission of energy
but privatized all other activities related to this sector.
 Constitutional reform is too simple. It modified few words
of articles 25,27 and 28. However, it made possible what has
been impossible during last 30 years.
II. Secondary Legislation
 April 2014: Mexican President sent to Federal Congress 9 bill of new energy laws and a
proposal to modify 12 currently in force laws.
New Laws:
1.
Law of Hydrocarbons
2.
Law of Electricity Industry
3.
Law of PEMEX
4.
Law of CFE
5.
Law on hydrocarbons revenue
6.
Law on Geothermic Energy
7.
Law of Mexican Oil Fund for development and Stability
8.
Law on regulatory Bodies of Energy Sector
9.
Law of the National Agency of Industrial Security and Environmental Protection of
Hydrocarbons Sector,
 Initiatives are addressed to strength productivity an financial viability.
 Agreements on these initiatives seems to be not easy.
 Transitory provisions has already defined the content of secondary legislation.
III. Renewables: the pending
reform
 There are two currently in force laws:
 Ley of Removable energies and and Support of
energy Transition. 2008.
 Law for sustainable use of Energy. 2008:
 Both of them are just programmatic pieces of
legislation without regulatory content.
 Proposal of Law of Geothermal Energy. It contains
big mistakes.
 So, Mexican Energy Reform consist of a more
intensive exploitation of hydrocarbons.
IV. Environmental analysis of the
reform
 Mexican Energy sector is the main responsible of green house
gases and it has caused the most catastrophic environmental
accidents: Ixtoc (1979), San Juanico (1984), Guadalajara (1992).
 New Agency but same old instruments of environmental
regulation.
 Land use regulations (environmental and social conflicts).
 Environmental impact assessment.
 Emissions control.
 New Agency just for Hydrocarbons Sector.
 Any activity generates land use conflicts. New Electricity Act.
 Exploitation of shale oil/gas offers new challenges:
 Subsurface use regulations
 Cujus est solum Roman Maxim
Conclusions
 Mexican energy reform focuses more on privatization that on
sustainability.
 Arguments behind the reform hold that alternatives for Mexican
Energy Sector are exploitation of both; shale gas/oil and hydrocarbons
placed in deep watters of Gulf of Mexico by private companies.
 An scenary of more intensive exploitation of hydrocarbons demands
more efective environmental controls:
 By addapting traditional instruments
 By including new schemes for payment of externalities.
 It is necessary an environmenta liability regime for energy sector.
 Redefining frontiers between:
 land property
 Subsurface property
 Natural resources placed into subsurface
 Thus, Environmental Energy Reform is still pending.

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