Electricity as a Tax

The electric reform presented by the president and that will be discussed this Sunday considers electricity not as a means to generate wealth nor well-being. At the heart of the declarations and intentions lies a painful truth regarding the origin and objectives of the reform: that electricity be a tax paid by Mexican companies and households.

There is a great conceptual confusion that permeates from equating the history of the national electric sector with that of oil, or even mines because of lithium. At the heart of the confusion, a 2.0 nationalization of electricity in the country is intended, but it is forgotten that electricity by itself is not wealth, but rather it is a means that would allow wealth to be generated if used in the correct way.

I reiterate, electricity by itself does not generate wealth, since we cannot generate it, bottle it and export it so that other countries buy it and profits are obtained from its exploitation. Nor can we use it to infinitely increase our well-being, that is, if price did not matter, having six refrigerators turned on does not improve our quality of life.

To the point of absurdity, neither can we use electricity as a force field to avoid invasions and protect national sovereignty from external aggressions. Much less give electricity to families so that they may feed themselves if food is lacking. We cannot use electricity as money, nor save electricity for the future or to relieve economic recessions.

“The vision is not only archaic, but, deep down, it is tributary.”

Electricity is, then, a means, not an end in itself. It is a means that allows us to improve the conditions of households, the lighting of streets, the mobilization of people and the productive activation of factories. Electricity is a means to mobilize and drive the economy; as a country, having an abundance of electricity means that you can offer it to companies so that they generate productive processes.

In Mexico, around 70% of the country’s electric energy is consumed by companies, from small businesses to large industries, and only 25% of consumption is attributable to households. This means that it is of no use to us to have an abundance of electricity if it is not used to strengthen the economy. That is, if tomorrow all companies stop consuming, Mexican households do not benefit; on the contrary, the economy is harmed.

If a country has an abundance of clean and cheap energy, it immediately positions itself as one of the most attractive countries to invest in and that is what generates wealth, not electricity flowing through the networks without being able to be used because companies abandon and stop investing.

The objective of the electric reform is clear and has been reiterated by its defenders on multiple occasions: that industries, businesses and households pay more for electricity, that they pay more to CFE and that CFE obtains control to set the tariffs it wants to whomever it wants and that each and every one of the load centers only buy electric energy from CFE.

The vision is not only archaic, but, deep down, it is tributary, because instead of seeing electricity as a good or service whose purpose is to enable satisfiers and drive economic dynamism, it is only seen as a tax to extract rents from the companies and households that consume the energy. It is simply and plainly about obtaining more cash flow for CFE.

This article was originally published by Energía a Debate.
Date: April 17, 2022
Link: https://energiaadebate.com/la-electricidad-como-un-impuesto/ [Online]

The Green Party and the Electric Reform

The position of the Ecologist Green Party of Mexico (PVEM) regarding the electric reform proposed by the federal government should go down in history as a serious risk to the environment of Mexicans and as a flagrant violation of the principles of green parties worldwide.

Green parties exist in a large part of the world and are born as an alternative movement to traditional parties of the left or right, liberal or conservative, because instead of proposing a broad agenda based on a series of values, they concentrate on an ideal or specific value and seek to influence the political system transversally, in this case and primarily, the environment.

For the most part they are the result of the revolution on sustainability that developed in the 1970s-1980s and if we start from the classic quote by Max Weber: “Politics is the aspiration to participate in power or influence the distribution of power,” initially these political organizations, more than the aspiration to participate in power, had as their purpose to influence the distribution of power in order to position sustainability on the agenda.

The first green parties appeared in Australia, New Zealand, Switzerland and the United Kingdom in the 1970s and began to spread throughout the rest of Europe between the 1980s and 1990s with the growing relevance of sustainability, the environment and climate change of the new world order after the Cold War. In Mexico, as part of that same wave, in 1993 the Ecologist Green Party of Mexico was founded.

In 2001, around 800 delegates from green parties from 72 countries in the world met in Australia to sign the Global Greens Charter based on six guiding principles: ecological wisdom, social justice, participatory democracy, nonviolence, sustainability and respect for diversity.

The Global Greens Charter was revised in 2017 and in it they recognize the climate crisis as one of the great challenges of world society and establish their commitment to limit the increase in global temperature to no more than 1.5 degrees, for which emissions should have gone down by 2020.

The agenda of the greens considers, then, working to support the transition to a zero-emissions global economy, promoting a moratorium on fossil fuels, stopping deforestation, promoting taxes on non-renewable sources and using the funds to finance the adoption of renewable energies and energy efficiency programs.

After reviewing the history and principles of the Greens worldwide, it is impossible to justify the arguments and actions of the PVEM in the proposal for constitutional reform in electric matters promoted by the federal government, since, despite the fact that it is established in the constitutional text, it does not contribute to the energy transition.

“…the green supports an initiative that bets that with the change of dispatch, CFE plants that use diesel, fuel oil and mineral coal will be used first.”

Instead of that, the green supports an initiative that bets that with the change of dispatch, CFE plants that use diesel, fuel oil and mineral coal will be used first. In contradiction, hydroelectric plants will not be able to increase their capacity in great proportion and will depend largely on the amount of water stored during the rainy seasons.

The PVEM allied itself with a project that does not establish taxes on fossil sources and, on the contrary, eliminates the only financial instrument that existed to promote the installation of renewable energies, the Clean Energy Certificates (CEL). In addition, instead of limiting dirty generation, it will promote it.

For this reason, and if Mexicans had a reliable long-term memory, the position of the Ecologist Green Party of Mexico regarding the electric reform proposed by the federal government should go down in history as a violation of the international principles of green parties, against the historic struggle of these organizations worldwide and against our environment. Unless green is only because of the color of the bills.

This article was originally published by Energía a Debate.
Date: Aplirl 12, 2022
Link: https://energiaadebate.com/el-partido-verde-y-la-reforma-electrica/ [Online]

Energy and Globalization

The energy transition planned and developed through international agreements is framed within the project of world order after the Cold War. This project, however, requires economic stability and global peace to foster international cooperation from an approach of mutual gains. Current events not only question the validity of the world order based on globalization, but also change the traditional paradigm of the energy transition that was gestated in this world order.

Let us go back in time three decades and return to the 1990s. In general, it could be said that this decade was marked by international optimism and economic stability, not to say an economic boom. The fall of the Berlin Wall, the disintegration of the Soviet Union and the end of the Cold War brought to an end the bipolar global order that governed the international community since the 1950s, which generated confidence to establish a new world order based on international free trade.

The appearance of regional blocs based on this new idea was a reflection of the possibility of a global world. The North American Free Trade Agreement created the largest commercial region in the world, while the Maastricht Treaty laid the foundations to advance in the integration of the European Union. The need to advance in the development of the less favored countries in Europe, Asia and Latin America was also recognized, leaving aside colonial aspirations of the countries but generating mechanisms for free trade.

“It was recognized, then, a threat to international security different from the traditional threats of the postwar period.”

With the threats of mutual global destruction due to a nuclear conflict behind, the international community began to concentrate on other social demands such as climate change. In the 1990s, the Earth Summit, the creation of the United Nations Framework Convention on Climate Change and the adoption of the Kyoto Protocol were pillars to guide the first global efforts of decarbonization. It was recognized, then, a threat to international security different from the traditional threats of the postwar period.

Facing the Russia and Ukraine conflict, the possibility of continuing under this model of multilateral cooperation in the future is questioned and it reveals the difficulty of maintaining cohesion to achieve common objectives, particularly in the energy and international decarbonization issue. It would seem that with this the stage of international optimism closes to return to that of multipolar political realism where each region defines its priorities based on its particular interests.

This article was originally published by Energía a Debate.
Date: Aplirl 5, 2022
Link: https://energiaadebate.com/la-energia-y-la-globalizacion/ [Online]