Mexico’s President Andrés Manuel López Obrador took the plunge on 1 October and sent to congress a constitutional reform initiative designed to cast his stalled energy reform in stone. López Obrador signalled his intent several months ago when a deluge of legal challenges held up his government’s energy reform crafted to give the state-run electricity firm, Comisión Federal de Electricidad (CFE), a pre-eminent role in the domestic market to the detriment of private renewable energy generators. Hostilities resumed the second he sent congress a bill to enshrine the CFE’s controlling share of the market in the constitution. There is a lot at stake. Beyond money and energy sovereignty, the cost for domestic consumers, and the future of Mexico’s renewable energy industry, there is also the international perception of the government’s respect for environmental commitments and the rule of law.
The constitutional reform initiative President López Obrador sent to congress contains a series of amendments to several different articles. The most contentious of these would grant the CFE a 54% controlling share in the domestic electricity market.
During his morning press conference on 1 October, López Obrador accused the ‘neoliberal’ governments that came before him of having stripped the CFE bare. He compared the 2013 energy reform that opened up the electricity market, which his government is seeking to reverse, to the colonial-era exploitation of Mexico.
Less publicised but just as controversial in its own way is the proposed dissolution of the two energy sector regulators Comisión Nacional de Hidrocarburos (CNH) and Comisión Reguladora de Energía (CRE). This is consistent with López Obrador’s concerted effort to dismantle autonomous and independent institutions that provide counterweights to his government or to subsume them under its control. The Centro Nacional de Control de Energía (Cenace) would also be absorbed into the CFE. López Obrador has long accused autonomous bodies of being a waste of public money but disbanding them or denuding them of power will lead to less accountability and less transparency in government.
Backlash
The private sector, renewable energy generators, and the main political opposition wasted little time in venting their discontent. The umbrella business group Consejo Coordinador Empresarial (CCE) released a statement dismissing López Obrador’s argument that his government’s energy reform would guarantee “fair prices for all Mexicans” as a fallacy, contending that it would “profoundly damage the economy of Mexican families” and “oblige all Mexicans to buy energy from the CFE regardless of how dirty, expensive, and inefficient it is”.
In a withering attack, the CCE argued that the reform initiative marked “the point of no return”. It said the reform would “cause irreversible damage to the rule of law, the environment, public finances, and the country’s competitiveness” by riding roughshod over judicial rulings which have held up the energy reform and international treaties to which Mexico is signed up, such as the Paris Agreement on reducing greenhouse gas emissions, while contravening “a fundamental principle of the constitution on the non-retroactive application of laws”.
Solar and wind energy providers, naturally, echoed these comments. Far from permitting “real and genuine competition”, as López Obrador claimed, they argued in a statement of their own that the reform would “dismantle the renewable energy industry”. They too claimed that, contrary to López Obrador’s assertions, consumers would feel the reform in their wallets. They went on to point to the huge investment in wind and solar projects in Mexico (see sidebar). And they also maintained that Mexico’s green credentials would be left in tatters, as the CFE “has historically preferred electricity generation from fossil fuels”, with the country swimming against the tide on clean energy and combating climate change.
Congressional debate
The solar and wind energy providers, the Asociación Mexicana de Energía Solar (Asolmex) and Asociación Mexicana de Energía Eólica (AMDEE) respectively, went on to lobby legislators to weigh up “the multiple and irreversible adverse effects of this initiative”. All eyes are now on congress. Simple arithmetic suggests that the constitutional reform initiative will fail. López Obrador’s ruling left-wing Movimiento Regeneración Nacional (Morena) and allies failed to secure a two-thirds majority in the lower chamber of congress in June’s mid-term legislative elections, which is required to amend the constitution. And they are now further short of this threshold than before in the senate after several defections [WR-21-39].
The main right-wing opposition Partido Acción Nacional (PAN) and left-wing opposition Partido de la Revolución Democrática (PRD) immediately came out against the constitutional reform initiative. The PAN party president, Marko Cortés, said the party would “roundly reject the reform to the CFE because it will directly affect the finances of the middle class and will have unprecedented repercussions for the environment, as it represents a backwards step for the use of clean and renewable energy”. The PRD party president, Jesús Zambrano, denounced what he described as “not a counter-reform but a historic step backwards for which Mexicans will pay”.
The silence from the Partido Revolucionario Institucional (PRI), however, has been deafening. The fate of the constitutional reform lies in the PRI’s hands. On the surface, a PRI alliance with Morena and its allies on the reform would seem improbable. It was, after all, the previous PRI administration led by Enrique Peña
Nieto (2012-2018) that pushed through the 2013 opening of the energy market to private investment that López Obrador wants to overturn. In addition to this, more than any other party, the PRI has been on the receiving end of public excoriation from López Obrador. But there is no shortage of members of the PRI that blame Peña Nieto for the party’s diminished state, and this could provide an opportunity for it to play a decisive role in politics once again and potentially extract concessions from the López Obrador administration.
That the PRI could be swayed is a genuine possibility as evidenced by the reaction of the PAN and PRD party leaderships. In a hastily arranged meeting, Cortés and Zambrano sought to persuade their opposite number at the PRI, Alejandro Moreno, to preserve the unity of the tripartite Va Por México coalition that opposed López Obrador in the last elections. Moreno promised not to reach any under-the-table deals with Morena, but he insisted upon more time for the PRI to consider the reform after more debate in public forums.
In the lower chamber of congress, Morena has 198 seats of its own and 79 more with allies, but it is still 57 seats shy of a two-thirds majority. The PRI, pointedly, has 70 seats. It is a similar story in the senate. Morena and its allies have 76 seats in the senate. The loan of the PRI’s 13 seats would bump this up to 89 seats and a two-thirds majority in the 128-seat upper chamber.
Electoral alliance
One thing that did come out of the meeting between the PAN, PRD, and PRI party presidents was an agreement to contest the majority of the gubernatorial elections in 2022 together in the Va Por México alliance. This includes the gubernatorial elections in Tamaulipas, Durango, and Aguascalientes, which are presently governed by the PAN, and Hidalgo, which is held by the PRI. No agreement has been struck yet on a unity ticket in Oaxaca, a PRI bastion.