Will Mexico’s Energy Reform Hamper its Climate Change Legislation?

The Mexican energy industry has remained closed to foreign investments since 1938 and its people have taken great pride in its energy independence. But President Enrique Peña Nieto hopes to revolutionize the country’s outdated energy policies with the reform bill he proposed August 12.

The bill, which still has to be approved by Congress, would amend two articles of the Mexican Constitution to give foreign energy companies the opportunity to invest in oil and gas projects on Mexican soil and offshore.

For 75 years, Mexico has been a large exporter of oil. But its oil production levels are not expected to last and Mexico could become an importer by 2020, reports Forbes. Since a 2004 peak of about 3.8 million barrels of oil a day, Mexico’s production has steadily declined. In 2011, the country’s oil production dropped to 2.96 million barrels per day.

Mexico has potential oil reserves of 14 billion barrels and shale-gas resources that could add up to 260 trillion cubic feet, according Pemex, Mexico’s state oil monopoly. But Pemex lacks the financing to harness additional oil resources in the Gulf of Mexico and natural gas in the country’s shale formations.

Part of the problem is that Pemex profits are used to fund about one-third of the federal budget, leaving it very little room for investing in offshore or shale drilling. The amount Pemex is expected to invest in the government climbed to $26 billion this year, according to the New York Times. In order to produce more energy resources, the country needs foreign and private investors to enter the industry and finance the excavation of oil and natural gas.

What About the Climate Change Legislation?

All this talk about the production of oil and natural gas seems to contradict Mexico’s General Law on Climate Change passed in April 2012. The legislation calls for a 30 percent reduction of greenhouse gas emissions by 2020 and a 50 percent reduction by 2050. In addition, Mexico has committed to using renewable energy sources to provide 35 percent of its electricity by 2024.

But as this proposed energy reform bill goes to Congress, you might wonder what toll the drilling will take on Mexico’s environment? And how might it affect the nation’s carbon emissions and renewable energy goals?

Though Pemex has hydraulically fractured a few wells, the potential for natural gas under the country’s surface has yet to be tapped. If the energy reform bill is passed, fracking could open up a slew of environmental concerns for Mexico’s citizens.

In order to push natural gas resources out of shale formations, millions of gallons of water, laced with chemicals and sand, are forced into the earth’s surface.  According to the U.S. Environmental Protection Agency (EPA), at least 65 of the chemicals known for use in fracking are hazardous. Many believe this contaminated water seeps into nearby drinking water and can cause severe sickness or permanent damage to people’s health.

Furthermore, some methane escapes into the atmosphere during natural gas production. This not only adds to the harmful greenhouse gases in the atmosphere, but methane also puts fracking sites at risk for explosion.

Offshore drilling also comes with a big environmental price tag. When you think of the impact of offshore drilling, you might first consider the oil spills. According to the EPA, about 14,000 spills are reported each year in U.S. waters.  But the environmental effects of oil travel well beyond the pools of oil in the ocean.

The oil captured at offshore drilling sites has a huge carbon footprint, from production and the refining of the commodity to the transportation emissions caused by boats and trucks that move oil to countries all over the world.  The oil and gasoline collected in offshore areas is used to power vehicles, which in turn produce massive amounts of emissions.

Instead of finding ways to cut back on its carbon emissions, this new energy reform legislation could actually add to Mexico’s carbon footprint. While the country stands to make a buck today, is the bill the best answer for a secure energy future?

Kristina Ross currently works as the webmaster and sustainability blogger at SaveOnEnergy.com. Her work concentrates on a healthier relationship between the environment and the people that live in it. She promotes the reduction of environmental impact through cleaner means of energy production and consumption.