Mexico Was More Reliant on Coal-Fired Electricity in 2022

Mexico is bucking the global trend toward decarbonization in power production as it generated a major portion of electricity by relying heavily on coal in 2022. The country's state-owned utility, CFE, has been prioritizing coal-fired plants rather than cleaner fuels as President López Obrador's ideology is based on a more nationalized approach.

According to Bloomberg Linea, Mexico´s coal-fired technology showcased an upsurge of 61.3% in 2022 as the country produced 1,621MWh in 2022, as compared to 995MWh in 2021.

The National Energy Control Center (CENACE), Mexico's grid operator, reported that 58% of the power transmitted in the grid was produced with natural gas and combined cycle plants, followed by hydroelectric power at 11%. However, coal-fired electricity generated 4% of the total energy mix, which is a 1% increase compared with the 2021 figure. Similarly, the International Energy Agency (IEA) analyzed in its Electricity Market Report 2023 that the average CO2 intensity of Mexican power generation has risen by 7% year-over-year in 2022 to reach 385g CO2/kWh due to the increased share of fossil-fired generation.

The José López Portillo, Carbón II and Plutarco Elías Calles power plants are the three coal-fired plants operated by the CFE. The company's director, Manuel Bartlett Díaz, argued that the emissions generated are following the current standard NOM-805-SEMARNAT-2011, which defines the maximum levels of fossil-fuel emissions authorized.

The government has stressed that renewable energy such as wind and solar is intermittent and requires strong cost backing. Therefore, stable fossil fuel sources are more attractive, although the country is receiving "cheap credit" from the US to build four wind farms.

This situation displays the ideology of President López Obrador, who views the market from a nationalistic perspective. According to The Guardian, the populist president has the vision of energy sovereignty and promotes the monopoly of PEMEX and CFE to produce oil, gas and electricity. Private players that invested heavily in clean energy are deemed as secondary to this mission, while emission and climate change commitments are an afterthought.

Recently, the paradigm established in the 2014 Energy Reform has been challenged, since the government aims to pull back the reins of privatization and gain greater control of the energy sector to fulfill its aim of energy sovereignty. Eduardo Andrade, General Director, Burns & McDonnell, told Mexico Business in 2022 that he expects more of the same to come in the next decade as this government is likely to be succeeded by a similar administration, which means that the future of electricity in Mexico will continue to center around CFE.