MEXICO CITY - The Mexican Automotive Industry Association (AMIA) pointed out the disadvantages of the electricity reform initiative proposed by President Andrés Manuel López Obrador, due to the negative effects it could have on the automotive production plant, as well as the international commitments signed by Mexico in agreements such as the Mexico-United States-Canada Agreement (T-MEC) and the Paris Agreement.
Regarding the proposed electricity generation scheme, where the Federal Electricity Commission (CFE) will generate at least 54% of the electricity and private companies the remaining percentage, AMIA is concerned that there may not be available financing, infrastructure and clean electricity generation to meet the increase in demand in the future.
From January to September 2021, 244.8 Tera Watts per hour were produced, of which the CFE generated 98.6 Tera Watts per hour (40%) and the private sector generated 146 Tera Watts per hour (60%).
Therefore, the automotive industry asks: How will the CFE develop the additional capacity equivalent to 14% to reach the 54% of the total required by this reform?
Also, considering the limited capacity of renewable sources that the CFE has, it is estimated that, in order to reach the proportion in electricity generation, it would have to use fossil fuels.
"This could increase the cost of electricity by up to 31%," said the AMIA in a statement.
In addition, this could have a negative impact on the promotion of renewable energy generation sources and an estimated increase in carbon dioxide emissions of 32%.
In 2021, the average price of electricity sold by the CFE in Medium Voltage was 1.22 pesos per kilowatt hour and private companies offered an average price of 0.42 pesos per kilowatt hour, AMIA stated.
In addition, eliminating the Clean Energy Certificates would prevent automakers from accrediting the use of renewable energies, which, in turn, would have an impact on compliance with the country obligations of corporations and country contributions regarding decarbonization commitments derived from international agreements signed by Mexico, such as the Paris Agreement, the 2030 Agenda and COP 26.
"Betting on less clean and more expensive energies would negatively impact Mexico's competitiveness, which could discourage future investments and redirect them to other countries," said José Zozaya, president of the AMIA.
By not promoting renewable energies, vehicle exports could be subject to trade retaliation, such as carbon taxes on manufactured goods, making Mexico less attractive as an investment destination and affecting job creation.
Therefore, he asserted, the electricity reform presents a risk for the automakers associated with the AMIA in the fulfillment of their visions and commitments to decarbonization and sustainability.
"We welcome the State's commitment to improve and adapt to the needs of citizens. However, for the reasons stated above, we reject the constitutional reform initiative in question and we ask the authorities to consider the negative effects it would have on the environment, investment and, therefore, on Mexico," said Zozaya.