The government’s obsession with fossil fuels is clear, due to inscrutable causes unrelated to reason. However, it has reached implausible extremes. Now, through the National Energy Control Center (Cenace), and invading the powers of the Energy Regulatory Commission (CRE), it issued an agreement last Friday that prohibits operational tests of renewable power plants, and in practice blocks its operation and dispatch. It is unprecedented in the world. Although the health contingency is fallaciously used as an argument, in reality there are two reasons for this unjustifiable outrage
The first is the low operating costs of renewable power plants (solar and wind) – their zero marginal cost – which is why they are dispatched as a priority and economically exclude fossil fuel CFE plants. In the context of a sharp drop in electricity demand due to the economic collapse, the government wants to avoid competition. It aims to put into operation obsolete, inefficient and polluting fuel oil plants, under the pretext of stability of the electrical system in terms of voltage and frequency, accusing renewables of intermittency. In Mexico, renewables contribute 6 -7% of total energy generation. In Germany, Denmark, Italy, California, Texas, and in several Chinese provinces and in many other countries, the penetration of renewables ranges from 15 to 30% without affecting the stability of the electrical system. The entry of fuel oil plants instead of renewables will severely impact costs, including the CFE itself (Basic Supply). We are all going to pay for it through higher taxes and electricity rates.
The second is the excess supply of fuel oil by the Pemex refineries and the government’s intention to refine more, which, in addition to involving greater economic losses, will generate more fuel oil, which almost nobody wants in the world anymore. Delivering that fuel oil is a key to his delirious energy plans. Recall that fuel oil is a residue of oil refining, and one of the dirtiest and most polluting fuels that exist, especially when it has a high sulfur content, as is the case of Mexico (4% by weight).
But the biggest cost of this absurd decision will be in terms of public health. Fuel oil is the most important source of PM2.5 pollutant particles that directly impact morbidity and mortality from cardiovascular, cerebrovascular, respiratory, cancer, and infectious diseases such as Covid-19; as has been extensively demonstrated in scientific research. In the Metropolitan Area of ??the Valley of Mexico and Tula alone, more than 14,000 premature deaths from PM2.5 caused by the Tula thermoelectric that runs on fuel oil are estimated. Fuel oil means death. Point.
The government’s decision, on the other hand, involves repudiating Mexico’s international commitments (which are the supreme law of the Nation) such as the Paris Agreement on climate change; a true international stigma. Also, it implies ostensibly violating national legislation in terms of the Energy Transition Law and the Climate Change Law that oblige to generate 35% of electricity from renewable or clean sources by 2024. It will also have implications in international trade agreements.
The decision represents an attack on the rule of law and trust. It casts aside a renewable generation capacity of 28 projects for more than 4,500 MW and an investment of more than 6,000 million dollars. It is another low blow to the national economy and to the private, national and foreign sector. It is also equivalent to torpedoing the financial profile of Banobras, Bancomext and Nafin, as well as the IDB and the World Bank, which have invested or participated as credit agencies in many renewable projects. Let’s hope for a stampede of private investment, and a wave of national and international litigation against the Mexican government. Yet another 4T disaster.
