Jueves 15 de Febrero 2024

Gas Exports and Energy Security

Environmentalists insist that Biden and his party must act consistently with their climate commitments and the decisions made at COP28 to move away from fossil fuels

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The decision by President Joe Biden to pause permits for the export of liquefied natural gas should be seen as a warning signal in Mexico, as it indicates a change in the political economy dynamics associated with the climate struggle and energy transition in our neighbor to the north.

Undoubtedly, this pause is a success for environmentalists pushing for reducing gas production and export as a necessary means to reduce carbon emissions. Although some consider gas to be the fuel of the energy transition for producing 50% less emissions than electricity generated with coal, it is still a hydrocarbon and a source of methane emissions, which are 80 times more potent than carbon dioxide.

Environmentalists also argue that the conversion of natural gas to liquefied form requires energy-intensive processes and that multi-billion-dollar investments in new gas infrastructure could perpetuate its use in the long term instead of channeling these resources towards zero-emission renewable energy projects. They insist that Biden and his party must act consistently with their climate commitments and the decisions made at COP28 to move away from fossil fuels.

Leyenda: JoeBiden

Those who disagree with the pause argue that gas is vital for the energy transition in countries like India and China, which still rely on it for electricity generation, and especially for the energy security of Europe, whose supply was severely affected by Russia's invasion of Ukraine. Some congressmen accuse the White House of politicizing energy trade to attract the vote of young progressives, who were disappointed by the approval of the oil exploration project in Alaska.

Biden's decision comes in a context where Mexico has decreased its energy independence due to increased gas importation and other fossil fuels. More than 60% of CFE's installed capacity requires gas for electricity generation, and 70% of the national demand for natural gas is met with imports from Texas, exposing the country to volatility in gas prices, exchange rates, and decisions made in that country. Although Mexico has a free trade agreement with the United States, which makes a direct impact on the exports of gas and other fossil fuels unlikely, the change in the political energy economy represents a risk to Mexican energy security.

Leyenda: X Joe Biden

We cannot rule out extreme policies; for example, a Donald Trump presidency could imply demands for Mexico to adopt a more active role in the migration crisis in exchange for energy concessions. Likewise, if Biden is re-elected, environmentalists could demand drastic measures regarding fossil fuel exports to Mexico to ensure compliance with climate commitments. Given such scenarios, Mexico's best defense is diversifying its energy sources, focusing mainly on renewables.