Mexico's Water Crisis Could Undermine Its Clean Energy Plans

14 hours ago 1

Mexico’s new president is making a major play to reform the country’s energy industry for greater energy independence and sovereignty, as well as a cleaner energy future. While this bodes well for the Mexican economy and for global climate goals, there is a critical tradeoff for this new plan: a major shortage of freshwater in the regions where the energy industry plans to expand.

A former climate scientist, President Claudia Sheinbaum is picking up the energy sovereignty torch where former president and fellow Morena party candidate Andrés Manuel López Obrador left off. But unlike AMLO, she seems to be serious about cleaning up the country’s carbon footprint. In February, Mexico’s state-owned electric utility, Federal Electricity Commission (CFE), announced plans to build nine solar power plants with a combined capacity of 4.7 GW by 2030, increasing its solar portfolio by more than tenfold, up from its current 433 MW.

The first phase of this CFE expansion plan includes six solar plants with built-in battery storage capacity, the first of which will start to come online in 2027. All six of them are going to be in Northern Mexico, a pivotal region for Mexico’s energy and economic ambitions.

Northern Mexico is poised for a major economic expansion. It already hosts a large part of the country’s energy sector, and could be fertile ground for expanded manufacturing capacities. “Proximity to the US border, a business-friendly environment and an entrepreneurial culture make the region prime for foreign direct investment, particularly amid the current wave of nearshoring,” said the World Economic Forum in a recent report.

Indeed, at a time when Mexico is trying to shore up its energy independence, transition toward clean energy, and develop its economy, the border states hold a lot of promise. There’s just one serious hurdle – it will come at the expense of the region’s water supply. This is a big deal in Northern Mexico, where more than 45% of aquifers are overexploited and rainfall averages are extremely low. What’s more, according to the World Economic Forum, “water governance is fragmented, infrastructure is ageing and climate change is intensifying drought frequency and severity.”

Plus, water policy between the United States and Mexico is fraught. Under an 80-year-old water treaty, Mexico and the United States are legally bound to provide certain amounts of water to each other across the border. But as the climate changes, populations grow, and industry becomes thirstier, and these obligations are becoming harder and harder to meet, ramping up tensions at the border. And believe it or not, this all has major implications for the energy sector.

Energy and water needs are deeply interrelated. Their relationship is known in academic and policy circles as the “water-energy nexus” – and while it’s a bigger deal in water-stressed areas like the Sonoran Desert region, it matters everywhere energy is created and consumed. “Water is used in all phases of energy production and electricity generation,” explains the United States Department of Energy in a 2014 info brief. And, on the other side of the nexus, “energy is required to extract, convey, and deliver water of appropriate quality for diverse human uses, and then again to treat wastewaters prior to their return to the environment.”

Water stress could therefore throw a major wrench into Mexico’s energy ambitions, not to mention other growing industries in the region, including data centers, semiconductors, shale drilling, and brewing beer. “Northern Mexico is a microcosm of the broader resource competition that will define the global energy transition,” says the World Economic Forum. “This case shows that a just energy transition requires not only decarbonization, but smart governance of water, land and social equity. Without that, economic development will be constrained, investments will be at risk and public trust will erode.”

By Haley Zaremba for Oilprice.com

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