Despite intense coverage of issues related to the southern border of the US, headlines about the energy policies of Mexico and the rest of Latin America rarely make headlines. However, as in other regions, energy is a major concern that is inextricably linked to economic well-being.
Poverty remains pervasive in Mexico and several countries in the South. Hunger, malnutrition, poor health, lack of education and limited access to basic services are symptoms of the poverty that threatens the lives of millions of people.
Therefore, it would be disastrous for these countries to pursue policies that affect their economies. For this reason, many of them are wary of falling into the trap of the global net-zero agenda, which is being touted as a way to avert a fabricated climate emergency.
Despite pressure from international leaders to join the “decarbonization” campaign, these countries prioritize overcoming poverty through fossil fuel-based economic growth.
Mexico’s pragmatic approach neglects renewable energy
Mexico, for example, has made bold decisions about its position on decarbonization. Eight and nine percent of the primary energy consumed in Mexico comes from fossil fuels. Mexico’s current government is aware of the serious problems that intermittent wind and solar power could pose to the country’s growing economy.
For this reason, it has passed a bill to repeal existing laws that mandate the prioritization of renewable energy. The bill calls for the power grid to get its main power supply from state-owned power plants, most of which run on fossil fuels.
The two largest state-owned energy companies, Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE), are seen as crucial to realizing Mexico’s economic ambitions.
“We have to strengthen Pemex and the CFE, we have to save them, because deliberate steps have been taken to destroy them, so that the energy market can remain in the hands of private, national and, above all, foreign companies,” the Mexican president said López Obrador in February 2021.
The online news agency Equal Times reported that the President has “launched a crusade against private renewable energy companies, which he accuses of colluding with previous governments to make millions in profits at the expense of Pemex and CFE.”
75 percent of the country’s electricity already comes from fossil fuels, and Obrador’s approach almost certainly ensures that percentage doesn’t change drastically.
The US Energy Information Administration (USEIA) forecasts that Mexico’s oil production is poised for a rebound: “Recently, rising private investment and rising condensate production have helped reverse a downward trend in Mexico’s oil production that began in 2004 at nearly two million barrels per day ( b/d), similar to levels since 2019. In the March 2023 short-term energy outlook, we forecast Mexico’s oil and other liquids production to average 1.93 million b/d and 1.91 million b/d per year in 2023 2024.”
“Mexico will almost certainly not deliver on its promise to the world to reduce its carbon emissions,” the analysts said.
Brazil and Peru must use fossil reserves to advance
Like Mexico, countries in South America are hoping to use fossil fuels to fuel their economies. Brazil is the continent’s most populous country and also the largest oil producer.
The International Energy Agency (IEA) projects that Brazil “will be responsible for producing about 50 percent of the world’s offshore oil by 2040, or about 5.2 million barrels per day.”
Brazil’s western neighbor Peru is expected to be among the three fastest growing economies in South America over the next few years. In 2021, fossil fuels accounted for almost 72 percent of primary energy consumption in Peru.
Still, the country is still at an early stage in energy consumption, ranking a dismal 116th in per capita primary energy consumption. In order to be able to cover the growing energy demand in the coming years, the country must increase its energy production.
According to USEIA, the country is “the seventh largest crude oil reserve holder in Central and South America with estimated proven reserves of 741 million barrels (as of January 2015”). To increase reserves, the State Petroleum Authority offered areas for oil and gas exploration earlier this year through negotiations and the completion of 31 technical contracts.
In the frenetic world of net-zero and green energy obsessions, it is not easy for emerging young economies to remain committed to the use of fossil fuels, which remain the bedrock of economic progress to this day. But you must.
This comment was first published by American Thinker on June 8, 2023 and can be accessed here.
Vijay Jayaraj is a Research Associate at the CO2 Coalition, Arlington, Virginia. He holds a Masters in Environmental Sciences from the University of East Anglia, UK and is based in India.