Mexico-Germany Dialogue for a Sustainable Future: Energy transition towards a low-carbon economy

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19 July 2017

The global momentum towards green growth as a strategy for decarbonizing key economic sectors such as energy has driven relevant transformative processes in both developed and emerging economies.

Energy transition points towards a low-carbon pathway to achieve sound economic growth in a sustainable way, while at the same time ensuring energy security. A few of the associated co-benefits of this energy transition could be seen by improving public health, ecological balance and access to water, changes mainly coming from the electricity market which continues to be dominated by fossil fuel based generation.

Mexico’s energy system is still reliant on fossil fuels for electric generation; barely 15.41% of electricity comes from renewable energy sources such as solar, wind, hydro, biomass, biogas and geothermal power.

Mexico aims to achieve a series of national level country goals that, aligned with the international commitments taken by the country in the Paris Agreement and Agenda 2030, tend to promote transformational changes in the electricity market and the role the State and non-governmental actors play in energy governance.

The foreseen deployment of new renewable energy capacity within the national energy mix considers achieving 35% of clean energy participation within the aggregated national electric generation by 2024, and 50% by 2050.

In order to achieve these clean energy goals, and to align them with the national greenhouse gas mitigation goals contemplated in the General Climate Change Law, the country has taken a decisive step in fostering its own national energy transition process.

Through a series of changes both at the constitutional and secondary law levels, the Reforma Energética (energy reform), was decreed in 2013, and ever since Mexico has joined the international community in its pathway for energy sector decarbonization.

In this context, on June 21rst and 22nd, the German Embassy in Mexico and the Mario Molina Center held the 10th edition of the Mexico Germany Dialogue for a sustainable future focused on energy transition towards a low-carbon economy. Mexico recognizes that the German energy transition process (Energiewende) has implied a set of strategic market changes within its energy sector and has considered both the supply and the demand side. Besides, it has also made room for analyzing the technological options for decarbonizing key intensive energy-use sectors such as transport based on fossil fuels such as gasoline and diesel.

The main objective of this event was to create a common and neutral dialogue platform for both countries to exchange their experiences and points of view towards the energy transition process, lessons learnt and best practices to compare the overcoming challenges both Germany and Mexico have, will and currently face.

During the opening session, some keynote speakers underlined the need to learn from national experiences and the need to reshape the energy sector governance making it easier to achieve decarbonization through technological dissemination, clean energy and energy efficiency.

Eng. Carlos Mena Brito, Executive Director of the Mario Molina Center, stated it is necessary for academia, civil society and government actors to “ join forces in order to identify the best strategies that can benefit Mexico and its transition towards a system of energy that is more efficient, responsible and collectively more inclusive”.  

Following his intervention, the German Ambassador to Mexico, H.E. Viktor Elbling emphasized that one of the most ambitious policies in Germany is the energy transition, where Germany is expecting to generate 40% to 45% of energy from renewable sources by 2022 and at least 80% from renewable energy sources by 2050.

He also pointed out that these experiences open a wide range of possibilities for both economies for joint collaboration: “Germany will decarbonize its transportation system by 2050, prompting the use of electric cars and low-emissions mobility networks”, he said. “Mexico can count on Germany as an energy ally to develop technological cooperation in the electricity markets and the possible establishment of carbon markets”.

On the other hand, Undersecretary of Energy Planning and Transition, Mr. Leonardo Beltrán, spoke of how the Energiewende has been a cornerstone and inspiration model to be followed by Mexico and other economies: “Mexico and Germany have developed collaboration mechanisms in order to build a future of cleaner energy and sustainable use, as well as developing a network of human capital in order to work towards these goals”.

A special feature of the dialogue was to include German experts on energy transition and the electricity market in the discussions. Mag. Daniel Argyropoulos of the German think-tank Agora Energiewende and Dr.-Ing. Harald Diaz Bone, of the International Renewable Energy Agency (IRENA) presented the key goals of the German energy transition process, the role of regulation, market forces and even the role technology has played in adopting specific measures and public policies to foster it, and pointed towards the need to transform main assumptions of energy use from both the supply and demand sides.

This dialogue also included a workshop where German and Mexican experts discussed five specific topics regarding the energy transition process in both countries: 1) the electrical wholesale market and the private sector participation; 2) the role of renewable energies and natural gas in electricity generation; 3) transmission and distribution networks’ technologies and private participation; 4) the impact of subsidies in energy efficiency, generation capacity and consumption patterns related investments and finally, 5) the technological alternatives for public and private transport.

Overall, the discussions led to relevant deliberations about how energy governance is shifting towards a more inclusive scheme where the State will need to design stronger regulations in order to reduce uncertainty to private investors and to the electricity sector. The private sector will also need to ensure reliability through smart systems if a sound transition aims to be fulfilled.

Technology remains an unmissable component for the energy transition, and this was clearly identified when discussing the relevance of energy storage options (batteries and other technologies) and the way it could potentially contribute to reduce uncertainty in clean energy dispatchability and reliance.

Technology also plays a pivotal role in promoting electric mobility in order to transit from a dominant fossil-fuel based system to a cleaner system of fewer emissions-related public and private transport and mobility patterns. 

Some other aspects discussed during the workshop where: the potential contribution of distributed energy for advancing clean energy national goals; the distortion generated by the use of subsidies and the way they may disincentive energy consumption efficiency and demand reductions; the need for an in-depth discussion of the role transmission subsector plays in the operability of the energy transition process and its mitigation impacts; and the energy efficiency impacts in the residential sector, among others.

The dialogue closed by highlighting the idea of generating a continued debate of the energy sector transformation. The German Energiewende shed some light on how the process is undertaken in a specific economic context, and not only the debate it raised for its implementation, but the challenges derived from its own process.

Climate change has been recognized as one of the main challenges for sustainable development, but it poses the possibility to move towards a low-carbon economy. To advance the national mitigation goals, the energy sector has an enormous endeavor due to its high-carbon intensity.

The Energy Reform poses an opportunity to provide a cleaner framework for economic development without compromising the development of future generations.

Access the presentations:

Panel 1: Markets: the Electrical Wholesaler Market and the private sector

Panel 2: Generation: Renewable energies and natural gas

Panel 3: Transmission and distribution: Network technologies and private sector

Panel 4: Consumption: The impact of subsidies in investments made in efficiency, generation capacity and consumption habits

Panel 5: Transport: Technological alternatives of public and private transport