Guest essay by Eric Worrall
h/t Richard, NoTricksZone – according to Deutsche Welle, the Mexican President is standing firm on his prohibition of all new grid connections to renewable energy plants, a policy shift which was originally reported by WUWT at the start of May.
Mexico stops the energy transition
5/22/2020
At the height of the pandemic, Mexico’s government slows down renewable energies and relies on heavy oil power plants. The U-turn startles environmentalists and investors – and also affects German companies.
At the end of March, when Mexico was already in quarantine, President Andrés Manuel López Obrador traveled to Oaxaca. He had his caravan stop in front of bare hills, on the top of which were white turbines from a wind turbine . “These wind turbines mess up the landscape,” he said into the camera. “They produce little energy and are owned by private companies that are subsidized for it. One of the typical scams of the neoliberals.” This was neither populist tapping nor ignorance, but part of a plan that has now been unveiled – and is angry with investors and environmentalists alike.
The now published guidelines of the Ministry of Energy prohibit new connections to plants that generate renewable energies due to alleged “instability in the network”. It is the third regulatory intervention in the electricity market where private providers have been competing with the state-owned company CFE since the 2013 energy reform. At that time, the expansion of renewable energies was outsourced to private providers. The regulatory authority CENACE set the technical framework and was obliged to give preference to the most efficient suppliers when it came to the feed-in. This secured the acceptance for the renewables.
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Read more (German): https://www.dw.com/de/mexiko-stoppt-die-energiewende/a-53510746
Translated using a Chrome Browser / Google Translate
I don’t understand why investors are so upset about not being allowed to connect to the grid, about being cut off from government subsidies. Surely they can just use their free energy renewables to produce climate friendly hydrogen by electrolysing seawater, and ship hydrogen straight to consumers, without having to rely on Mexico’s shaky grid infrastructure. Australia’s chief scientist assures us the renewable hydrogen economy is a huge opportunity. Just over the border in California, advocates assure us there is a hydrogen boom.
WTOP accuses the Mexican President of using Coronavirus as an excuse to prop up State owned big oil;
Mexico cites virus in slapping down renewable energy
The Associated Press
May 17, 2020, 4:47 PMMEXICO CITY (AP) — The Mexican government has cited the coronavirus pandemic as a justification for new rules that will reduce the role of renewable energies like solar and wind power, granting a reprieve to the government’s own ageing, fossil-fuel power plants.
The decree over the weekend has sparked outrage among Mexican and foreign investors who had been allowed to sell their power into the government-operated grid. Industry associations said it will affect 28 solar and wind projects that were ready to go online, and 16 more under construction, with a total of $6.4 billion in investments, much of it from foreign firms.
“This represents a frontal attack on legal security for investments in Mexico, and causes serious consequences for the country, including the loss of jobs and investor confidence,” Mexico’s Business Coordinating Council wrote Sunday. The council cited $30 billion in affected investments, noting “this does not just discriminate against renewable energy, it also allows authorities to artificially inflate the price of electricity in the country and arbitrarily displace any private sector power generation project.”
It is not the first such tussle for President Andrés Manuel López Obrador, a champion of the state-owned oil industry who dislikes renewables and private-sector energy projects. Since taking office in December 2018, he has canceled planned bidding on private oil exploration and forced private firms to renegotiate gas pipeline contracts.
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Read more: https://wtop.com/latin-america/2020/05/mexico-cites-virus-in-slapping-down-renewable-energy/
President Andrés Manuel López Obrador is an interesting guy. He has extended free college and government spending, but cut pay for politicians. In 2004 he hired Trump Attorney and former New York Mayor Rudy Giuliani to help solve Mexico City’s crime problem. A big statist but a pragmatist. Maybe kind of an old style socialist, like someone from the time before Anglosphere socialists stopped caring about ordinary people and embraced the green agenda.
IMHO the main factor in all this is not COVID19 — it’s the sharp decrease in money transfers into Mexico from citizens in the US (legal and illegal). Those “remittances” are in the tens of billions of dollars annually, and essentially comprise the nation’s entire welfare state. This is (indirectly) how Trump is making Mexico pay for the border wall.
The new trade deal Trump did with Mexico will more than pay for the Southern Border Wall all by itself, as it will keep billions of dollars per year, that would have gone to Mexico in the past, under the old trade deal, to stay in the United States, where that money is taxed and is then used to generate additional economic activity in the United States.
Trump reduces our deficit with Mexico with the new trade deal, and that money stays in the United States instead of going into some else’s economy, like it did in the past.
And Trump has reduced the U.S. deficit with Japan, South Korea and China and is working on reducing the deficit with the EU. Trump is adding billions of dollars to the U.S. economy with each trade deal he makes.
Noone else would have done what Trump has done with trade. Our past leaders were content to let the whole world steal from the United States. Trump is not content with that and he is changing it.
And the nations he is dealing with are not whining and crying over the new deals (other than China), they are relatively happy with how things turned out. Trump isn’t trying to steal from them, he is just trying to level the playing field, and those he is dealing with know it, so there is no cause for resentment because there is no unfairness involved.
Sorry, Nick, but what fossil fuels mostly receive are tax breaks which technically aren’t subsidies. The media erroneously lumps actual subsidies and tax breaks under the banner of “subsidies”, so as to be able to say “look, ff receive subsidies, too!”. A subsidy is defined as the giving of money by a government. With tax breaks, no one is “giving” you anything, rather you’re allowed to keep more of what was yours to begin with. So an apples to apples comparison would obviously be money handed out to money handed out, tax break to tax break. The results would be nothing like in your link
Most of the Greenies you talk to think fossil fuel corporations are getting subsidies if they’re not being taxed on the revenues rather than net income after expenses. Fair dinkum they think capital depreciation is a tax subsidy except with windmills and solar panels presumably but the reality is they’re utterly clueless about what defines profit.
observa,
To be fair, they are utterly clueless about everything but, especially, anything doing with math and science.
Yes I have seen a number of greens argue that and not realizing so would renewable and every other company because it is how the tax system works.
Canada, France, Italy, Germany, Spain and 15 other EU countries would like to meet mexican minister Nahle to protect the interests of EU and Canadian companies impacted by the decision of the mexican President. The mexican decision could be very well understood: Mexico will not finance the take over of the mexican energy sector by foreign invaders, especially not from mexican tax money. It seems that Canada and certain EU countries think that Mexico is a colony of Canadian and EU greenies.
https://www.eike-klima-energie.eu/2020/05/24/mexikanische-pattsituation-investoren-von-wind-und-solar-sind-wuetend-da-die-mexikanische-regierung-alle-neuen-anlagen-blockiert/
I suspect the Mexican President may be covertly involved in Trumps mostly covert assault on the cartels.
Eradication of the cartels is vital and may finally be getting the kind of effort that may do so.
But shh!
The Cartel doesn’t like suggestions like this.
The U-turn startles environmentalists and investors – and also affects German companies.
Better be careful pi**ing off those Germans…..
WTOP accuses the Mexican President
And guess where WTOP comes out of? You guessed it, the bowels of the marxist tax-seeking, tax-funded regulatory swamp, Wash DC.
As a Mexican national and living in Mexico, I can assure you AMLO is not an honest man.
He is a populist of the worst kind. His main interest is to have total control on energy companies.
His great desire is to rescue PEMEX, the broken state owned company, to produce more sulphur loaded fuel oil, a commodity nobody needs and is now banned even to be used at sea. And to do so, the thermoelectric plants will be using this fuel as well as carbon to power them. All of this, not for economical or technical reasons, but for political reasons and to favor his corrupt friends.
Actually the cost of producing electricity by the state owned electric company monopoly is 6 times higher (and +1000% more polluting) than that produced by privately owned companies using natural gas plants, and wind and solar farms.
And to be clear, no government subsidies are used by these privately owned plants.
The dilema is using or not using renewables. The problem is trying to keep a state monopoly at all costs, even if the people suffers economically and environmentally from these decisions. A way of controlling peoples lives and the energy they choose to use.
An issue promoted by zoocialists from all over the world.
Gonzalo,
I do not live in Mexico but from the northern side of the border, I expected the worst with Obrador and have been pleasantly surprised by him. For all I know, he may be another Chavez but, so far, he doesn’t appear to be. For one thing, he is obviously far more intelligent than Chavez (and Maduro).
As one who has many friends from Mexico, I hope for the best and he has not been nearly as bad as I thought he’d be. Time will tell.
These people (link below) are betting money on him and they provide their reasons for doing so. I wouldn’t put my money on him myself but I sure hope they are right for Mexico’s sake.
Pemex and the Mexican Economy
by Deborah Watkins of LM Capital Group, 3/8/19
https://www.advisorperspectives.com/commentaries/2019/03/08/pemex-and-the-mexican-economyand
These are their reasons for staying invested in Mexico.The Pemex bonds are a holding in spite of their huge debt and mediocre management for the following reasons:
* They are a SOE (state-owned-enterprise), and a default would destroy the credit of Mexico, which has to refinance 40 billion dollars in the next two years.
* Pemex doesn’t have to pay for the crude it sells and, therefore, has huge operating profits
* Taxation for Pemex is not consistent with the tax code for other companies. The government uses it to finance other expenses and can, if it has to do so, lower Pemex’s taxes it to maintain them as a viable entity.
* Pemex is now in the world’s spotlight, and the government will make it its poster child in the fight against corruption.
* None of the joint ventures created in the Peña Nieto administration under the energy reform rules have been cancelled.
* Lopez Obrador knows he will be measured by what happens in Pemex, as it is an easy way to judge if his policies are successful; so he will do what is necessary to ensure its success.
Barring dramatic changes, we will continue to hold our positions in Pemex bonds, and we feel the current yield over 7% amply covers the perceived risk of the issuer not paying interest or principal.
KcTaz,
After living and working in Mexico’s oil industry for 12 years, I also have many friends there, and they UNANIMOUSLY think Obrador is their worst nightmare. Both PEMEX and contractors. Contractors to PEMEX have not been paid in 180 days and longer.
Renewable supporters, IMHO, fall into two categories. 1) Willfully uninformed who want to believe the world can be powered by sunshine and breezes and 2) Corrupt liars that are someway in the game as suppliers, employees, landowners, grant seeking scientists, campaign contribution seeking politicians, etc If there is a 3rd category I will welcome hearing of the new insight.
This could be the beginning of the end of the climatose condition of economies around the world ravaged by covid. The climatistas think that covid will sell climate change but it looks more like covid will sell climate denial.
https://tambonthongchai.com/2020/04/29/numnut-un-bureaucrat/
Good on the President for has stand against wind turbines.
Wait until he finds out that the WT’s produce no real energy. A WT cannot boil a jug.
Let me explain. WT’s are asynchronous and do not produce the legally required 50/60Hz wave form energy essential for our homes and industry.
They do produce lots of harmonics termed in the industry as ‘dirty energy’ which through smart meters are fraudulently added to consumers power accounts.
Being asynchronous WT’s cannot be synchronised with the grid which is a legal requirement.
WT’s in their life time cannot produce the energy that went into making them.
They are manufactured by an industrial economy and their toxic blades go to landfill.
They are not green and the sooner the whole damned lot are switched off the better.