Recently, Mexico took a huge step back in clean energy by raising transmission fees to clean energy providers under the argument that we need to sure-up our energy security and that they threatened the grid’s stability.
Mexico has had socialized electricity utilities for decades now, it began with the nationalization of a number of energy companies across the country which provided terrible access at a huge cost into the sole Federal Electrical Commission. Then it finalized with the dissolution of the Light and Power company in Mexico City in the late 2000s; the only remaining part of the electricity system that was not controlled by CFE. While CFE is not perfect, to many it not only brought electricity for the first time, it also brought it at a more affordable price point.
When Peña Nieto came into office in 2012, he proposed an energy sector reform which opened up the petroleum and electricity sector to private and foreign companies, it was widely criticized by Lopez Obrador and other progressive politicians. Under the clean energy generation scheme, private companies could generate electricity and sell it to the Federal Electrical Commission.
However, Obrador then came into office in 2018 promising energy independence, which included raising our petroleum production back to its peak. While he hasn’t been able to do that, he begun refining crude oil into gasoline and other products in some of Mexico’s functioning refineries; decades old dinosaurs that are not environmentally or economically viable due to their aging equipment.
One of the side products of refining oil is heavy fuel, which is usually delegated to marine and power generation plants. However, Pemex’s heavy fuel is so sulphur heavy that it’s actually banned by international regulators, and they can’t sell it for marine use. Instead they turned to the electrical commission as their buyer of heavy fuel... But of course... in order to consume more heavy fuel, you need to produce more electricity, which is why clean energy providers were targeted. Another issue is that we will make more diesel than we consume. So naturally the Yucatan peninsula train network, one of the landmark infrastructure projects, will use diesel locomotives across the acres of protected jungle it traverses.
One of Obrador’s early targets were clean energy providers that happened to mostly be private companies. Many of the regulations and transmission fee hikes were illegal and are now traveling down the courts, but in the meantime governors have started using their long-forgotten powers and actually remembered that they can charge carbon taxes.
So now, Francisco Cabeza de Vaca, the governor of the border state of Tamaulipas, said that his government would propose a bill in the local congress imposing a carbon tax to any company using heavy fuel within the state... and since the Federal Electrical Commission is, legally, a productive state company, they have to pay local taxes as well. Other governors have stepped up, like Jalisco’s Enrique Alfaro who has been a constant challenger of whatever the president wants. Alfaro in particular promised to sue the energy secretariat for unconstitutional behaviour.
So yeah, Mexico is on the verge of having states taxing the feds. Which is the sort of legal bullshit I love to hear about.