Advancing energy self-sufficiency while making progress on environmental protection: a balancing act
The use of fuel oil for electricity generation raises regulatory, environmental and investment-related challenges in the context of the reform to Mexico’s Electricity Industry Law.
The decline in international demand for fuel oil, driven in part by environmental restrictions such as IMO 2020, led Pemex to seek greater domestic use of this fuel, particularly through purchases by CFE for electricity generation.
This scenario is connected to the reform of the Electricity Industry Law, which modified aspects of electricity dispatch and triggered legal disputes involving market participants, civil society organizations and public authorities. Available avenues of challenge include amparo proceedings and the potential initiation of international arbitration under investment treaties.
The discussion also has an important environmental dimension due to the emissions associated with fuel oil and the need to reconcile energy security and reliability objectives with environmental protection and sustainable development.
