The committee has three types of membership: public entities, private companies, and other academic and professional organizations. The principal governing body is the Members Assembly. The Board of Directors, which meets bimonthly, is composed of seventeen members representing the different groups of the three types of membership; these are elected officials, half of them elected every year. An executive committee of the Board has a president and four vice-presidents, two from the public sector and two from the private sector; they are assisted by an Executive Director and a Treasurer appointed by the committee members. Every two years, the presidency rotates between the public and private sectors.
Dr Pablo Mulas del Pozo is the Secretary of the Mexico National Committee of the World Energy Council. Between 1999 and 2001, he was Regional Coordinator for Latin America and the Caribbean for the WEC, and was also Chairman of the Energy Market Reforms Study group from 2002 to 2004. Dr Mulas has a Bachelor’s Degree in Applied Science from the University of Ottowa and a PhD in Engineering from Princeton University. After acting as Chief Advisor to the Secretary of Energy, he was appointed Director of the Energy Program at the National University of Mexico in March 1997 and later held the position of Director of University Programs there. In April 2002, Dr Mulas joined the Metropolitan University in Mexico City as Adviser to the President. Four years later, he joined Mexico’s Electric Power Research Institute as a member of the research staff. Dr Mulas has also occupied the following roles: Director of the Nuclear Reactor Laboratories of the Nuclear Research Center of Mexico; Director of the Energy Resources Division; and President of Mexico’s Electric Power Research Institute.
Energy in Mexico
At the time of the 2018 issues survey, Andrés Manuel López Obrador (AMLO) had recently been elected as the 58th president of Mexico. AMLO’s campaign put the oil and gas industry on edge, with the promise to overrule the energy reforms passed under president enrique pena nieto. AMLO suggested he would reduce crude oil exports, diverting supplies for domestic refining. Mexico’s aging refineries operate below capacity, and it has become increasingly dependent on imported fuel from the united states.
Uncertainty around U.S. Policies, which could impact oil products and gas exports to Mexico as well as trade barriers, have characterised the dynamics of Mexico’s energy sector in this period. Concerns surrounding electricity prices, mainly industrial tariffs that increased of the order of 80% in 2018, have also led to major uncertainties among industrial sector leaders. On the other hand, 2018 saw positive developments in the energy efficiency and renewable energy spaces. A report carried out by the national commission for the “efficient use of energy” by the Economic commission for Latin America and the Caribbean (ECLAC), which assesses the country’s progress in energy efficiency, has praised Mexico regarding its actions and programs. Some of the main factors behind the energy intensity decline include the outsourcing of the economy, structural changes, the substitution of fuels, and actions for energy efficiency in response to higher electricity prices. The integration of renewable sources onto Mexico’s energy mix is also progressing positively, although financial and social aspects have created some obstacles to project development. In addition, energy leaders’ perceptions around regional integration have gained certainty following inclusion of clauses concerning the energy sector onto the recently signed united states-Mexico-Canada agreement (USMCA) and with the connection of Mexico’s electricity system with the north american reliability system.
It is also worth mentioning that the new administration has ratified Mexico´s ambitious goals for clean energies and international commitments related to climate change.
Recent U.S. Policy towards Mexico has been characterised with volatility and unpredictability, causing concerns and raising uncertainty in the energy industry due to large amounts of US natural gas and oil imported to Mexico. Indeed, gas alone accounts for over 60% of Mexico’s electricity fuels, nearly 65% of which is imported from the US. This increased reliance on US gas imports raises uncertainty, especially on prices, as the US plans to substantially increase exports to China and India, among other countries.
At the time of the Issues Survey (August-October 2018), the U.S., Mexico and Canada were discussing the termination of the North American Free Trade Agreement (NAFTA) and the creation of a new trade deal. The risk of heftier trade barriers was a primary concern for business and policy leaders as there was no certainty around the terms of the new agreement. In November 2018 the United States-Mexico-Canada Agreement (USMCA) was signed (although not yet ratified). The agreement includes an investor-state dispute resolution (ISDS) protection for oil and gas, infrastructure, energy generation and telecommunications among other rules that are expected to impact the energy sector.
In 2018, the implementation of a new formula to calculate electricity prices for the industrial and business sectors has raised uncertainty as the resulting tariff increase has led some small businesses to close. Increased electricity costs are expected to impact public water utilities who may be forced to increase the prices paid by consumer. The issue is on the agenda of the new government administration and is an ongoing concern.
According to the recently published National Report on Monitoring Energy Efficiency 2018, Mexico’s residential sector has reduced its energy consumption by 45.9% from 1995 to 2015. The progress is due to stricter national efficiency standards and targeted public policies, which treat energy efficiency as an action priority and a means to maintain the country’s productivity and competitiveness in the international and domestic market. An interesting point highlighted in the document is that the decoupling of economic growth and energy consumption is apparently underway.
In 2018, Mexico’s market for clean energy certificates (CECs) have been activated as a fundamental resource in the country’s ambition to increase the amount of electricity generated from clean energy sources, including renewables and nuclear energy, to 35 percent by 2024 and to 50 percent by 2050. A system of auctions for energy, capacity and CECs that offer long-term contracts has been designed to capture relative values of different generation technologies by both location and production profile. The clear investment framework and the resulting development of the renewables industry have placed Mexico among the world leaders in integrating climate change objectives into policy making.
The North American Foreign Ministers’ Meeting which took place in Mexico in February 2018, reunited the governments of Mexico, the United States and Canada to discuss energy and the renegotiation of NAFTA. During the same year, the main developments around regional integration has been determined by the replacement of NAFTA with the USMCA. An additional progress was achieved with the participation of the Mexican electricity system into the North American Reliability System.
The new U.S. Administration and the election of AMLO as the new Mexican president have determined most of the discussions leading to emerging uncertainties in Mexico’s energy sector. At the same time, progress has been achieved around issues which count with a long-term action plan such as renewable energy and energy efficiency. While the discussions on the replacement of NAFTA raised uncertainties, the successful signing of the USMCA added a level of clarity to regional energy relations.