Mexico Passes Law Encouraging Renewables Investment

Turn to the nation's most objective and informative daily environmental news resource to learn how the United States and key players around the world are responding to the environmental...

By Emily Pickrell

Dec. 14 — Mexico's Congress voted to approve its Energy Transition Law, key legislation designed to ensure development of clean energy as part of its efforts to open its energy sector to private investment.

After more than a year of debate, the legislation—which will establish targets and incentives for the development of clean energy—passed both the Senate and House of Deputies by clear majorities Dec. 11, and provided more detail on how Mexico plans to meet its ambitious climate change targets of 35 percent clean energy by 2024.

President Pena Nieto has said he will publish the measure and make it law. He tweeted: “Thanks to Congress, Mexico will have a new instrument to promote a sustainable future through ‘green’ growth.”

Environmental officials say the new law, which passed just one day before international climate change negotiations in Paris were completed, will be an important tool in helping Mexico keep the commitments it made at the talks.

“The passage of this law will permit our country to achieve its global warming mitigation objectives by incorporating clean energy into Mexico's energy matrix,” Rafael Pacchiano, secretary of the Natural Resources Ministry, said in a written statement.

The law will provide intermediate goals for renewable energy production, establishing a 25 percent target by 2018 and 30 percent by 2021. It also will provide more details on how Mexico's new clean energy certificate program will operate when it begins in 2018.

In Mexico, the term clean energy encompasses renewable energy, hydropower, nuclear power and co-generation.

Concern Over Price Increases

The law also includes some mechanisms to contain the potential cost of the certificates, as a way of appeasing the industrial sectors' concerns that the new law would drive up electricity costs.

“We were looking to generate enough incentive to the generators while still providing the needed certainty for investors,” Sen. Jorge Lavalle, one of the architects of the legislation, said in an interview with Bloomberg BNA, speaking about the decision to include price caps in the energy transition legislation.

Environmental groups have said the new law is critical to demonstrate Mexico's commitment to its climate change targets and the development of renewable energy. Other industry experts have predicted that the law's implementation could prove more complex.

“It was approved after a great deal of antagonism from the Mexican industrial trade groups,” said Miriam Grunstein, an independent Mexico City-based energy consultant. “It passed because otherwise Mexico would not pass the red face test in COP-21 [the climate talks] in Paris. We will see whether these commitments are kept. I doubt it.”

To contact the reporter on this story: Emily Pickrell in Mexico City at

To contact the editor responsible for this story: Greg Henderson at

Request Environment & Energy Report