The energy proposals of Mexico's main presidential contenders

Mexico’s two main presidential candidates have presented key elements of their energy proposals ahead of the June 2 elections.

The next president is due to take office on October 1.

While both candidates put the energy transition front and center, they differ on how to achieve it. The main contrasts are visible in their approaches toward federal oil company Pemex and the role of the private sector. 

Claudia Sheinbaum, the current frontrunner and a member of President Andrés Manuel López Obrador’s Morena party, wants to continue the energy independence plan implemented by the current government and strengthen Pemex and national power utility CFE.

In this scenario, both companies will remain the predominant players in their sectors. CFE accounts for 54% of the electricity generation market, helped by government moves to skirt the 2013 energy reform, while Pemex controls the country’s seven oil refineries, in addition to dominating exploration and production.

Xóchitl Gálvez, representing the Fuerza y Corazón por México coalition – an alliance between the PRI, PAN and PRD parties – wants to modernize Pemex so it can start its energy transition.

Her proposals include Pemex focusing on exploration and production and reducing refining activity by shutting down the Cadereyta and Madero refineries in Nuevo León and Tamaulipas states. Gálvez proposed reviving auctions in which CFE would have to compete against private companies to buy cheaper and cleaner energy, putting renewable firms back on the map.

Sheinbaum presented her plan in Mexico City on Monday during an event celebrating the 86th anniversary of the nationalization of petroleum, while Gálvez has made comments on her plans on several occasions. On Monday, Gálvez also published on social media a list with 10 actions to modernize Pemex, and she met with young voters interested in clean energies in Yucatán state. 

Pemex’s debt is projected to reach US$94.5bn by the end of the year, down from US$106bn currently, Reuters reported CEO Octavio Romero as saying. 

Sheinbaum said on Monday that Pemex could even support lithium exploration, while Gálvez said in March in Monterrey that the company could also become a power utility by adding cogeneration and geothermal generation to its activities. And Gálvez proposed to open the company to private investment. 

In terms of renewable energies, Gálvez vowed to build 100 wind and solar projects and 10,000 electric vehicle charging stations, while Sheinbaum promised to promote the construction of renewable projects, needed for the energy transition. 

Sheinbaum's proposals

Sheinbaum at the event where she presented her energy strategy

Sheinbaum’s plan involves six objectives and 10 actions to achieve them. 

Six objectives

1. Energy sovereignty so Mexico advances in guaranteeing supply with its own resources.

2. Robustness in the face of external changes, with the clear participation of the energy sector in public finances and “reasonable debt” for the sector.

3. Decrease in energy intensity.

4. Universal access to electricity, gas and/or renewable energy sources for basic needs.

5. Reduction of emissions and greenhouse gases.

6. Attention to rural areas where firewood is still consumed to increase efficiency in use and reduce lung diseases, and promote renewable energy sources in these communities.

10 actions

1. No price increases in real terms for gasoline, diesel and electricity.

2. Pemex and CFE will continue consolidation as “strategic public companies” for the benefit of consumers and development, as privatizations are ruled out.

3. Oil production will remain at 1.8mn barrels per day, while higher energy demand must be absorbed by renewable energy sources. Natural gas burning will be reduced, but production increased to lower imports.

4. Pemex will have a long-term sustainability plan and participate in lithium extraction, as it will remain “the company of all Mexicans”.

5. CFE will guarantee and strengthen energy transmission and distribution capacity and maintain its participation in electricity generation at 54% or more and the private sector will remain at 46%.

6. Promotion of an ambitious cross-sector energy efficiency program.

7. Promotion of electric transportation, both public and private, and the acceleration of electromobility.

8. Promotion of the energy transition.

9. Promoting the national petrochemical industry and giving greater impetus to the production of fertilizers.

10. Serving communities with less than 2,500 inhabitants that do not have access to electricity.

Gálvez's proposals

Meanwhile, Gálvez wants to strengthen Pemex and vowed to back a renewable energy push.

Gálvez with supporters during a visit to a wind farm in Progreso

Pemex modernization

1. Urgent maintenance of Pemex's platforms, ducts and gas pipelines;

2. Financial reengineering to achieve sustainable refining; 

3. Fight corruption; 

4. Pay providers and contractors at once in full; 

5. Upgrade and maintain equipment and processing to achieve sustainable standards; 

6. Take advantage of methane for the industry;

8. Technocratic leadership; 

9. Bet on geothermal energy, hydrogen and carbon capture; 

10. No privatization, but modernization.