Mexico and South America Must Tap Fossil Fuels to Fight Poverty

Despite intense news coverage of issues surrounding the U.S. southern border, it is rare to see headlines about the energy policy of Mexico and the rest of Latin America. Nonetheless, much as in other regions, energy is a major concern inextricably tied to economic well-being.

Poverty remains pervasive in Mexico and various countries to its south. Hunger, malnutrition, poor health, lack of education and limited access to basic services are the symptoms of destitution challenging millions of lives.

Hence, it would be disastrous for these countries to adopt policies disruptive to their economy.  This is why many of them are being careful about falling into the trap of the global net zero agenda being promoted as a way to avert a fabricated climate emergency.

Regardless of pressures from international leaders to join the campaign to “decarbonize,” overcoming poverty with economic growth powered by fossil fuels is taking precedence in these countries.

Mexico’s Pragmatic Approach De-emphasizes Renewables

Mexico, for instance, has made bold decisions about the its position on decarbonization. Eight-nine percent of all primary energy consumed in Mexico comes from fossil fuels. Mexico’s current administration understands the serious problems that intermittent wind and solar could pose to the growing economy of the country.

This is why it has approved a bill to reverse existing laws that require the prioritization of renewable energy. The bill would require the power grid to receive its primary electricity supply from state-owned plants that mostly run on fossil fuels.

The two main state energy companies, Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE), are viewed as criticial to meeting Mexico’s economic ambitions.

“We need to strengthen Pemex and the CFE, we need to rescue them, because deliberate moves have been taken to destroy them, so that the energy market could be left in the hands of private, national and above all foreign companies,” Mexican President López Obrador said in February 2021.

The online news outlet Equal Times reported that the president had “launched a crusade against private companies in the renewables sector, which he accuses of making millions in profits, in cahoots with previous governments, at the expense of” Pemex and CFE.

Seventy-five percent of the country’s electricity already comes from fossil fuels, and Obrador’s approach almost certainly ensures that this percentage does not change drastically.

The U.S. Energy Information Administration (USEIA) forecasts that Mexico’s oil production is set for a revival: “Recently, increasing private investment and rising condensate production helped reverse a downward trend in Mexico’s oil production that began in 2004. In 2022, Mexico’s oil production was nearly two million barrels per day (b/d), similar to levels since 2019. As of the March 2023 Short-Term Energy Outlook, we forecast that Mexico’s petroleum and other liquids production will average 1.93 million b/d in 2023 and 1.91 million b/d in 2024.”

“Mexico will almost certainly fail to meet its pledge to the world to reduce its carbon output,” according to analysts.

Brazil and Peru Need to Utilize Fossil Reserves to Move Forward

Like Mexico, countries in South America hope to utilize fossil fuels to propel their economies forward. Brazil is the largest by population on the continent and also the largest oil producer.

The International Energy Agency (IEA) predicts Brazil will “become responsible for the production of about 50 percent of the world’s offshore oil in 2040, or about 5.2 million b/d.

Brazil’s western neighbor, Peru, is predicted to be among the three fastest-growing economies in South America in the next few years. In 2021, fossil fuels accounted for nearly 72 percent of the primary energy consumption in Peru.

But still the country is in the primitive stages of energy consumption, ranked at a dismal 116th position for per capita primary energy consumption. If the country were to meet the growing energy demand in the coming years, it needs to ramp up its energy production.

According to USEIA, the country is the “seventh-largest crude oil reserve holder in Central and South America, with 741 million barrels of estimated proved reserves, as of January 2015.”  Earlier this year, in an effort to boost reserves, the state petroleum agency offered areas for oil and gas exploration through negotiations and 31 technical contracts.

In the frenzied world of net zero and green energy obsessions, it is not easy for aspiring young economies to remain committed to their use of fossil fuels, which to this day remain the bedrock of economic progress. But they must.

This commentary was first published at American Thinker, June 8, 2023, and can be accessed here.

Vijay Jayaraj is a Research Associate at the CO2 Coalition, Arlington, Virginia. He holds a master’s degree in environmental sciences from the University of East Anglia, UK and resides in India.


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