Could Mexico’s renewable energy industry benefit from Trump’s wall and his anti climate, pro fossil fuel stance?



A Mexican wind farm. Photo credit: Presidencia de la Republica Mexicana via Wikimedia.


By Anders Lorenzen

Since it was first proposed by Donald Trump, news stories concerning Mexico have been dominated by his pledge to build a border wall between the two countries, and the pending trade war such a measure would create. Mexico has made it clear that they will not give into his bully-boy tactics and diplomatic relations between the two neighbours are at a historic low.

But can there be positive outcomes if Trump’s wall was to get the go-ahead when combined with his small appetite for tackling climate change?

Mexican energy writer Mariana Jiménez thinks so and here she suggests that if, as is expected, Trump and his administration continue to promote their anti-climate and pro fossil fuel stance, a potential result could be that investors flock to Mexico.

She might have a point. While Trump has not hidden his disapproval of renewables, there has not yet been any significant policy changes that have deterred investment. However, the government’s signalling is consistent and includes exiting the US from the Paris Agreement, ripping up the Clean Power Plan and favouring fossil fuels over renewables. It is a stance that completes a radical 180-degree change of direction from the Obama administration, and will hardly fill investors and renewable energy developers with confidence.

Then there is, of course, the minor detail that conditions for renewables in Mexico have never been better. According to analysis from Bloomberg New Energy Finance (BNEF) and the International Renewable Energy Association (IRENA), from 2014 to 2015 Mexico’s renewable energy investments increased by 151 percent, reaching US$4 billion. This makes Mexico the world’s ninth (and Latin America’s second) most attractive destination for renewable energy investment. Mariana notes that this trend is likely to continue as “the implementation of the Energy Reform, which included two power auctions in 2016 and more to come this year, are expected to continue pushing Mexico to the top of clean energy investments as the auctions’ winners alone represent US$6 billion investment in new clean energy capacity, mostly solar and wind.”

Similarly certain of continued progress is BNEF’s renewable energy index, Climatescope, which notes that “Mexico has an aggressive mandate to generate 35% of its power from clean sources by 2024 (the government’s definition of clean energy includes wind, solar, geothermal and biomass, as well as hydro, nuclear and efficient cogeneration). To help achieve this target, the new power market rules established clean energy certificates, imposing on all large consumers a minimum level of consumption from emission-free technologies.” While also pointing out that the political ambition to tackle climate change is high, and utilises all the nation’s most-loved resourcesahead of the United Nations Framework Convention on Climate Change meeting in Paris in November 2015, Mexico was one of the first developing countries to submit its Intended Nationally Determined Contribution (INDC). It committed to a 30% emission reduction under a business-as-usual scenario (BAU) by 2020.”

During the Obama years, the US worked together with Mexico in a joint climate and renewable energy partnership. How Mexico would fare on their own, with a possible trade war between the countries remains to be seen. But regardless of who controls the US White House the renewable energy future in Mexico looks promising. If Trump hesitates in making it clear that when it comes to renewable energy, the US is open for business, then due to the fantastic conditions and geographic position, Mexico could soon be about to become a lot more attractive for renewable energy investors, developers and industry professionals.

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