How Mexico's T-MEC Energy Policy is Defying Doubters

The energy landscape within the framework of the Treaty between Mexico, the United States, and Canada (T-MEC) has not been without its differences and conflicts. However, Arturo Ortiz Wadgymar, coordinator of the World Economy Research Unit at UNAM's Institute of Economic Research, asserts that these challenges have served to strengthen Mexico's energy policy. Contrary to doomsday predictions, Mexico is now poised for energy self-sufficiency, thanks to a resilient approach that prioritizes the stability of state-owned enterprises like Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE).

The journey towards a robust energy policy was not without hurdles. In 2019, when Mexico unveiled its energy policy, skeptics were quick to dismiss it as untenable. Pemex, burdened with an overwhelming debt of over $100 billion, was seen as a sinking ship. Critics argued that the strategy was doomed to fail, predicting a world where gasoline consumption would plummet within six years.

International groups, often backed by powerful transnational corporations, opposed Mexico's energy policy and supported alternative energy providers, such as Iberdrola, under the banner of clean energy. In essence, they advocated for the privatization of the sector and leveraged dispute panels within the T-MEC agreement to press their case. Despite their efforts, they found themselves unable to sway the outcome.

Arturo Ortiz Wadgymar emphasizes that there are tangible achievements within Mexico's energy policy. Oil exports continue, but a substantial portion now serves the domestic market, allowing for the production of gasoline, diesel, turbosine, and other petroleum products without the need for imports. This strategy, coupled with the revitalization of refineries, has kept fuel prices and tariffs in check, significantly curbing inflation.

Mexico's commitment to clean energy is also evident. Efforts are underway to transition from coal-based thermoelectric plants to solar energy. While this shift takes time, it underscores Mexico's commitment to reducing its environmental footprint and mitigating climate change.

The shift in policy disrupted the interests of a select group of private energy generators who had previously benefited from exclusive privileges. Filing numerous injunctions, these companies acted as a quasi- “club of energy generators.” These legal battles tested Mexico's resolve, but ultimately, the country's growth remained on a steady course.

T-MEC's Recognition of Sovereignty

Joaquín Flores Paredes, an academic from the Cuautitlán School of Higher Studies, points out that Article 81 of the T-MEC acknowledges Mexico's sovereignty over hydrocarbons. This recognition reaffirms each nation's right to regulate energy matters in accordance with its constitution and domestic laws through democratic processes.

While conflicts within the T-MEC have garnered attention, the actual formation of a dispute panel remains uncertain. Additionally, the possibility of a political agreement looms. It's worth noting that Mexico and Canada have also engaged in disputes with the United States over rules of origin in the automotive sector, illustrating the multifaceted nature of negotiations within the treaty.

Foreign companies, particularly those from Spain, played a significant role in opposing Mexico's energy reforms. They utilized lobbyists in the United States and Canada to exert pressure on these nations to challenge Mexico's stance. However, Mexico has stood firm in safeguarding its energy sovereignty.

Mexico's energy policy within the T-MEC framework has evolved in the face of challenges and opposition. While navigating the complexities of energy reform, Mexico has maintained its commitment to both energy security and clean energy transition. The nation's resilient approach has yielded positive results, reaffirming its sovereignty and ensuring that energy remains a cornerstone of its economic development. As Mexico continues on this path, it is poised to emerge as a more self-reliant and sustainable energy powerhouse.