Mexico's president nods to environment but favours state energy firms

Mexico's President Andres Manuel Lopez Obrador delivers his second state of the union address at National Palace in Mexico City, Mexico on September 1, 2020. (REUTERS Photo)
Mexico's President Andres Manuel Lopez Obrador delivers his second state of the union address at National Palace in Mexico City, Mexico on September 1, 2020. (REUTERS Photo)

MEXICO CITY, September 3 (Reuters): On the campaign trail two years ago, Andres Manuel Lopez Obrador pledged to meet Mexico's commitments on combating global warming and discussed moving the oil-producing nation away from fossil fuels with leading environmentalists, like former U.S. Vice President Al Gore.

Since taking office in late 2018, Mexico's president has promoted a major reforestation program, pledged to phase out the herbicide glyphosate, and railed against fracking.

"As a matter of conviction, we've decided to take care of the environment like no previous government has done," the leftist nationalist said in a major speech this week.

But, in policy terms, Lopez Obrador has prioritized the health of Mexico's state-owned energy behemoths, oil company Petroleos Mexicanos (Pemex) and power firm Comision Federal de Electricidad (CFE).

For instance, he has pledged a new $8 billion oil refinery in his home state of Tabasco, plus upgrades to six existing Pemex facilities. And he has sought to temporarily prevent dozens of privately-owned wind and solar plants from connecting to the national grid, saying power from them was too intermittent.

Lopez Obrador's government also postponed a rule requiring cleaner-burning diesel until after he leaves office in late 2024, arguing that Pemex lacks the infrastructure to meet it.

While his allies say Lopez Obrador's support for the energy giants will curb Mexico's dependence on foreign fuel and promote economic development, critics slam him for what they charge has been backsliding on environmental goals.

Lopez Obrador's energy agenda may have little in common with many of the environmental goals of progressive politicians in the United States or Europe, but it is a familiar strategy for leftist leaders in developing nations: targeting state-centric industrial development in a bid to tackle rampant poverty.

Manuel Rodriguez, a congressman from Lopez Obrador's Morena party, said the president's insistence on strengthening Pemex and CFE was necessary to guarantee Mexico has sufficient domestically-produced energy.

He said upwards of 70% of Mexico's gasoline is imported, mostly from U.S. refiners, due to insufficient Pemex production."It's a very risky situation. We're vulnerable," said Rodriguez, who leads the lower house's energy commission. He pointed to the possibility of supplies being disrupted by natural disasters - such as a major hurricane - or a trade

embargo by the U.S. government. To date, no such major disruptions have occurred.

'MORE URGENT PROBLEMS'

Rodriguez pointed to Lopez Obrador's opposition to fracking as an example of his concern for the environment.

Fracking - the process by which dense petroleum-rich rock is blasted open with massive amounts of water, sand, and toxic chemicals - has opened up vast deposits of oil in the United States, including in the Permian Basin which straddles Texas and New Mexico.

Lopez Obrador has blocked efforts to launch fracking in Mexico's northern border states, such as Tamaulipas.

But for critics like Rosanety Barrios, a senior energy ministry official with Mexico's previous government, Lopez Obrador has failed to act in other ways. She highlighted that he has made no effort to force the CFE's most polluting plants to switch from highly-contaminating fuel oil to natural gas.

She said CFE's Tula plant near Mexico City could run entirely on natural gas if a local dispute over a pipeline were settled. A recent Reuters investigation showed the plant has for years busted legal contaminant limits.

"I don't think the government has any interest in resolving it," she said.

The CFE did not respond to a request for comment, but the head of the company has previously said he would like to move towards using natural gas in the plants.

Lopez Obrador, a former Mexico City mayor, stirred hopes that he would adopt a bold environmental vision when he met with Al Gore just a few months before his landslide election victory in 2018.

"It was great to see their profound overlap on climate action and energy transition," Marcelo Ebrard, who was then a senior campaign aide to Lopez Obrador and is now foreign minister, wrote in a tweet at the time.

The president appointed a well-known biologist and academic as his environment minister in 2019. But, after disputes with the cabinet, he resigned on Wednesday, citing stress and unspecified health reasons.

Historian Lorenzo Meyer said Lopez Obrador's focus on promoting economic development via the state-run energy companies makes sense politically.

He said the president's priorities were rooted in an era when Pemex powered Mexico's development and filled government coffers. Many Mexicans view the state-run firms as sources of national pride.

Absent a rejuvenated green movement, the president's focus would remain fixed on combating poverty and corruption, he said.

"For him, those are more urgent problems."