Table Of ContentENERGY
POLICIES
BEYOND IEA
COUNTRIES
LMuexxeimcobourg
22001177 Review
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ENERGY
POLICIES
BEYOND IEA
COUNTRIES
Mexico
2017
INTERNATIONAL ENERGY AGENCY
The International Energy Agency (IEA), an autonomous agency, was established in November 1974.
Its primary mandate was – and is – two-fold: to promote energy security amongst its member
countries through collective response to physical disruptions in oil supply, and provide authoritative
research and analysis on ways to ensure reliable, affordable and clean energy for its 29 member
countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among
its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.
The Agency’s aims include the following objectives:
n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular,
through maintaining effective emergency response capabilities in case of oil supply disruptions.
n Promote sustainable energy policies that spur economic growth and environmental protection
in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute
to climate change.
n Improve transparency of international markets through collection and analysis of
energy data.
n Support global collaboration on energy technology to secure future energy supplies
and mitigate their environmental impact, including through improved energy
efficiency and development and deployment of low-carbon technologies.
n Find solutions to global energy challenges through engagement and
dialogue with non-member countries, industry, international
organisations and other stakeholders.
IEA member countries:
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Estonia
Finland
France
Germany
Secure
Greece
Sustainable
Hungary Together
Ireland
Italy
Japan
Korea
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
© OECD/IEA, 2017 Spain
International Energy Agency Sweden
Website: www.iea.org Switzerland
Turkey
United Kingdom
United States
Please note that this publication
is subject to specific restrictions
The European Commission
that limit its use and distribution.
The terms and conditions are also participates in
available online at www.iea.org/t&c/ the work of the IEA.
1. Executive summary 9 S
T
Overview of the energy reform 9 N
Reform in energy governance 10 E
T
Reform in the oil and natural gas sectors 11 N
O
Reform in the electricity sector 12
C
Long-term approach for tackling climate change and rising
F
energy demand 13 O
Key recommendations 15 E
L
B
PART I. POLICY ANALYSIS A
T
2. General energy policy 17
Country overview 17
Economy 19
Supply and demand 19
Mexico’s historic energy reform 22
New institutional set-up 24
Objectives and strategies of Mexican energy policy 29
Assessment 32
Recommendations 38
References 39
3. Climate change 41
Greenhouse gas emissions 41
Energy-related CO emissions 42
2
Institutions 44
Policies and measures 45
Adaptation and resilience 49
Carbon capture and storage 50
Assessment 52
Recommendations 54
References 55
3
4. Energy efficiency 57
Overview 57
Final energy use 57
Institutions 60
Policies and measures 63
Assessment 69
Recommendations 72
References 73
PART II. SECTOR ANALYSIS
5. Oil 75
Overview 75
Reserves, supply and demand 76
Institutions 80
Government policies 81
Implementation 85
Industry structure 93
Emergency preparedness and planning 98
Assessment 99
Recommendations 102
References 102
6. Natural gas 105
Overview 105
Reserves, supply and demand 105
Prices and taxes 108
Institutions 109
Government policies 110
Implementation 112
Industry structure 117
Assessment 120
Recommendations 122
References 123
4
7. Coal 125 S
T
Supply and demand 125 N
Assessment 128 E
T
Recommendations 129 N
O
References 129
C
8. Electricity 131
F
O
Overview 131
E
Supply and demand 131
L
Regulatory framework 138 B
A
Institutions 139 T
Industry and infrastructure 141
Wholesale market structure and design 146
Retail prices and subsidies 154
Electricity security 158
Assessment 160
Recommendations 164
References 165
9. Renewable energy 167
Supply and demand 167
Institutions 170
Policies and measures 171
Assessment 176
Recommendations 177
References 178
10. Nuclear energy 179
Overview 179
Institutions and legislation 180
Outlook for new nuclear capacity 181
Nuclear fuel cycle, radioactive waste and decommissioning 183
Assessment 184
Recommendations 185
References 185
5
PART III. ENERGY TECHNOLOGY
11. Energy technology research, development and demonstration
(ETRD&D) 187
Overview 187
ETRD&D policy framework: Objectives and strategies 187
Institutions 189
ETRD&D funding and financing 190
International collaboration 195
Individual initiatives with Mexican participation 196
Assessment 197
Recommendations 198
References 198
PART IV. ANNEXES
ANNEX A: Organisation of the review 201
ANNEX B: Energy balances and key statistical data 204
ANNEX C: Energy efficiency standards 208
ANNEX D: International Energy Agency “Shared Goals” 211
ANNEX E: Glossary and list of abbreviations 213
6
S
T
LIST OF FIGURES, TABLES AND BOXES
N
E
Figures T
N
2.1 Map of Mexico ......................................................................................................... 18
O
2.2 TPES, 1973-2015 .................................................................................................... 20
C
2.3 Breakdown of TPES in Mexico and in IEA member countries, 2015 ....................... 20
2.4 Energy production by source, 1973-2015 ............................................................... 21 F
O
2.5 TFC by sector, 1973-2014 ...................................................................................... 22
2.6 New Mexican energy institutional set-up ................................................................. 24 E
3.1 CO2 emissions by sector, 1973-2014 ...................................................................... 42 L
3.2 CO emissions by fuel, 1973-2014 .......................................................................... 42 B
2
3.3 Energy-related CO emissions per unit of GDP in Mexico and in A
2
other selected IEA member countries, 1973-2014 .................................................. 43 T
3.4 CO emissions and main drivers in Mexico, 1990-2014 .......................................... 44
2
3.5 CO intensity of electricity generation in Mexico and in selected IEA member
2
countries, 1973-2014 .............................................................................................. 44
4.1 TFC by sector and by source, 1973-2014 ............................................................... 59
4.2 Energy intensity in Mexico and in selected IEA member countries,
1973-2015 ............................................................................................................... 60
4.3 TPES per capita in IEA member countries and in Mexico, 2015 ............................. 60
5.1 Crude oil production, 1973-2015 ............................................................................. 77
5.2 Refinery output by oil product type, 1973-2015 ....................................................... 77
5.3 Oil supply by sector, 1973-2014 .............................................................................. 78
5.4 Oil consumption by product, 2014 ........................................................................... 79
5.5 Oil production in the "No Reform Case" relative to full implementation
of the reform ............................................................................................................ 80
5.6 Oil industry organisation .......................................................................................... 84
5.7 Fuel prices in Mexico and in IEA member countries, second quarter 2016 ............. 90
5.8 Bidding results of Round One ................................................................................. 93
5.9 Midstream distribution infrastructure ....................................................................... 95
5.10 Progressivity of royalties in the oil upstream as a function of the oil price ............. 100
6.1 Natural gas production, 1973-2015 ....................................................................... 107
6.2 Natural gas net imports by country, 1990-2015 .................................................... 107
6.3 Natural gas supply by sector, 1973-2014 .............................................................. 108
6.4 Household natural gas prices in Mexico and in IEA member countries,2015 ........ 109
6.5 Household natural gas prices in Mexico and in selected IEA member countries,
2004-15 ................................................................................................................. 109
6.6 Natural gas infrastructure (2016) ........................................................................... 114
6.7 Natural gas price index, Henry Hub and Reynosa ................................................ 116
7.1 Hard coal and brown coal production, 1973-2015 ................................................. 126
7.2 Hard coal imports by country, 1973-2015 ............................................................. 126
7.3 Coal demand by sector, 1973-2014 ...................................................................... 127
8.1 Electricity generation by source, 1973-2015 ......................................................... 132
8.2 Electricity generation by source in Mexico and in IEA member countries, 2015 ... 132
8.3 Net electricity imports to and exports from Mexico, 1990-2015 ............................. 134
8.4 Electricity consumption by sector, 1973-2014 ....................................................... 135
8.5 The new structure of the electricity industry .......................................................... 139
8.6 Privately owned electricity generating capacity by installation year, 1994-2014 ... 141
7
8.7 Map of Mexico’s electricity network, 2016 ............................................................. 145
8.8 Expected electricity prices by location and time in the first auction (March 2016) . 151
8.9 Map of the results of the March 2016 long-term auction ....................................... 153
8.10 Electricity prices in Mexico and IEA member countries, 2015 ............................... 157
8.11 Electricity prices in Mexico, the United States and Canada, 1980-2015 ............... 158
8.12 Electricity supply Interruption time per user in Mexico and in selected IEA
member countries, 2013 ....................................................................................... 160
9.1 Renewable energy as a percentage of TPES, 1973-2015 .................................... 168
9.2 Renewable energy as a percentage of TPES in Mexico and in IEA member
countries, 2015...................................................................................................... 168
9.3 Electricity generation from renewable sources as a percentage of all generation
in Mexico and IEA member countries, 2015 .......................................................... 169
10.1 Nuclear power generation and percentage of total power generation, 1989-2015 .. 179
10.2 Energy availability factors of NPPs in Mexico and in OECD/NEA member
countries, 2000-15 ................................................................................................ 180
11.1 Mexican Petroleum Fund mechanism ................................................................... 191
11.2 Mission Innovation Initiative – ERD&D investment ................................................ 193
Tables
4.1 Energy efficiency programmes co-ordinated by CONUEE ...................................... 64
4.2 Selection of energy efficiency programmes in the buildings and appliances
sectors .................................................................................................................... 67
5.1 Oil reserves and cumulative production, 2015 (mboe) ............................................ 76
5.2 Bidding areas, their resources and surface area, by type of activity. ...................... 87
5.3 Bidding results in detail ........................................................................................... 94
5.4 Refineries in Mexico: Processing capacity and location, 2015 ................................ 96
5.5 Mid- and downstream infrastructure in Mexico, 2015 .............................................. 97
6.1 Shale gas estimations (tcf) .................................................................................... 106
6.2 Natural gas trading permit holders in Mexico, 2015 .............................................. 117
6.3 Natural gas transportation pipelines ..................................................................... 118
6.4 Natural gas transportation pipelines projects ........................................................ 119
6.5 Gas storage terminals in 2015 .............................................................................. 120
8.1 Electricity generating capacity, 2000-15 (MW) ...................................................... 133
8.2 Installed electricity supply capacity by category, 2015 .......................................... 142
8.3 End-user electricity subsidies (USD million), 2010-15 ........................................... 155
8.4 Annual average interruption time by user, 2006-15 ............................................... 160
9.1 Renewable electricity generating capacity, 1990-2014 (MW) ............................... 169
9.2 Main indicators in the 2014-18 Special Program for the Use of Renewable
Energy ................................................................................................................... 172
11.1 FMP resources for Energy Funds ......................................................................... 191
Boxes
2.1 Climate policy and Mexico’s low-carbon energy transition ...................................... 36
5.1 Recommendations by the Federal Economic Commission on Competition
(COFECE) on the transition to a competitive fuel market in Mexico ........................ 92
6.1 Implementation actions foreseen by the Gas Market Implementation
Policy short-term implementation actions are: ...................................................... 113
8.1 Mexico’s power market outlook to 2040 ................................................................ 136
8.2 Implications of a “No Reform Case” for the Mexican power sector ....................... 137
8.3 Price benchmarks during operation applicable to variable renewable energy ....... 150
8
S
N
O
I
T
A
D
N
Executive summary E
M
This first review of Mexico’s energy policies by the International Energy Agency (IEA) M
comes at a momentous time for the country’s energy sector. The broad-based reform of
O
the energy sector, beginning with the constitutional changes of December 2013, has
C
continued at a steady and impressive pace. Its reach and scope represent the most
E
ambitious energy system transformation worldwide in recent years. The IEA welcomes
R
these efforts and applauds the government of Mexico for the progress made to date.
Y
Starting from a largely closed and monopoly-driven energy market, the reform has led to E
concrete steps to harness market forces to attract investments, increase transparency K
and rule of law, improve energy security and strengthen the environmental sustainability
D
of the energy sector.
N
A
Mexico’s reforms are bringing its energy policies increasingly in line with the IEA Shared
Goals (see Annex D of this report). Some policy areas, such as promoting competition Y
and redesigning emergency preparedness, are not finalised yet and will have to remain a R
priority for the reform. A
M
M
Overview of the energy reform
U
S
The energy reform is part of the government’s broad structural and institutional reform
package, introduced by President Enrique Peña Nieto, which aims to modernise the E
Mexican economy and society and bolster long-term growth through increased efficiency V
and productivity. In the oil, gas and power sectors, the country was lacking in investment I
T
and productivity growth. Oil production had been for decades a major source of
U
government budget revenue, but was declining sharply, while inefficiency in electricity
C
supply was driving costs higher, harming the competitiveness of industry and increasing
E
the volume of subsidies to supply power to the growing population at low cost. Energy
X
supply also relied heavily on fossil fuels which exacerbated local air pollution and put the E
country’s greenhouse gas emissions on a long-term pathway which was incompatible
with the country’s climate policy ambitions.
The reform required several changes to the Mexican Constitution, adopted in December
2013. By August 2014, the reform had been codified in 10 new laws and 12 modified
ones. The reform is covered in more detail in the individual chapters of this report. The
reform is being implemented in phases and the government aims to finalise its
implementation before the expiry of its current term in November 2018.
The reform opens the long-closed oil, gas and electricity sectors to competition. It turns
the state-owned monopolies Petróleos Mexicanos (PEMEX) and the Federal Electricity
Commission (CFE) into state productive enterprises, which are expected to follow a
business-driven strategy and to strengthen incentives for investments from old and new
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