Paper: Mexico’s energy reform requires new governance model for country’s northeastern region

A new governance model is needed for the implementation of Mexico’s energy reform in the local government entities of the country’s northeastern region, according to a new paper from the Mexico Center at Rice University’s Baker Institute for Public Policy.

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The region has vast resources of nonconventional hydrocarbons — mainly coal — and great potential in terms of renewable energies — mainly wind and solar power, according to the paper’s author, Pilar Rodríguez Ibáñez. She is a professor in the School of Law and Criminology at Universidad Autónoma de Nuevo León.

Her paper, “The Role of Local Governments in the Energy Sector and Implications of the Energy Reform for Local Governments,” argues that the implementation of the energy reform is a complex process that requires regional energy planning that incorporates the capacities, resources and actions of all private, civic and political strategic players in the northeastern states of Coahuila, Nuevo León and Tamaulipas. These Mexican states share a border with the state of Texas.

“In this respect, it (the governance model) is sought to prioritize cooperative relationships between local governments in northeast Mexico and between those governments and companies, higher education and research institutions, the federal government and citizen organizations to open channels of close communication and exchange information and feedback regarding the implementation of the energy reform,” Rodríguez Ibáñez wrote.

For the operation of the governance model, she proposes the creation of a supra-state entity, the regional council, which would include the strategic players in the region.

The paper was written for a Mexico Center research project examining the rule of law in Mexico and the challenges it poses to implementing the country’s energy reform. The project’s findings are compiled in a Spanish-language book and are being posted on the Baker Institute’s website in English.

Mexico’s energy sector had been under strict governmental management since 1938. This changed in 2013 and 2014 when Mexico amended its constitution and passed legislation overhauling its energy sector to allow private and foreign investments.

Rodríguez Ibáñez said local governments in the northeastern region face critical challenges, including a lack of solid urban and energy infrastructure, environmental and social impacts resulting from the development of energy projects there, and the need to empower the specialized human capital in the energy sector and strengthen technological capacity.

“Based on these premises,” Rodríguez Ibáñez wrote, “we can distinguish four implications of the reform for local governments in northeast Mexico that can help pave the road to overcome these challenges: A new tax levied on hydrocarbons exploration and extraction activities; an ambitious package of investment projects by the federal government as part of the National Infrastructure Program 2014-2018; a mandate requiring operating companies to conduct social impact evaluations for the energy projects in the hydrocarbons and electrical industries; and a national content policy within the scope of hydrocarbons assignments and contracts (related to all exploration and extraction activities).”

About Jeff Falk

Jeff Falk is associate director of national media relations in Rice University's Office of Public Affairs.