· 5 min read
For the first time, one of the leaders of the world’s biggest economies is a climate scientist. Isn’t that a dream come true?
A few days ago, Claudia Sheinbaum was elected President of Mexico – and in style. With just shy of 60% of the vote, she beat out her primary opponent by a 30-point margin and cemented the dominance of the populist-left Morena Party.
But Sheinbaum was not always a politician. The daughter of a biochemist and an engineer, she first took up the family trade, earning a PhD in energy engineering. After years as a successful climate researcher, she co-authored a chapter of the 2007 IPCC report, for which she and her co-authors were awarded the Nobel Peace Prize.
In short, President Sheinbaum understands climate change. But she is also a shrewd politician in an age of difficult choices. What will this mean for climate policy?
Going backwards
Sheinbaum’s fellow scientists are clear: Mexico is failing on climate and going backwards. The country ranks 38th/67 in the Climate Change Performance Index, down seven places since 2023. It remains the world’s 11th largest oil producer, pumping nearly two million barrels a day. President Andres Manuel Lopez Obrador, a.k.a. AMLO – Sheinbaum’s predecessor and great mentor – was a champion of the state-owned oil company Pemex as a source of energy sovereignty and national pride. He increased fossil fuel subsidies – including a $3.5-5 billion fiscal bung in 2021 – whilst slowing renewable investment and killing off clean energy auctions. In 2021 and 2022, 70% of Mexico’s ‘climate budget’ was allocated to… new fossil gas infrastructure.
Obrador didn’t even bother trying to greenwash. After dissolving the National Institute for Climate Change in 202, he submitted an updated NDC in 2022, that aimed for higher emissions than its previous 2016 iteration, in breach of international and Mexican law. Climate Action Tracker downgrades the country’s policies from ‘highly insufficient’ to a bottom-of-the-barrel ‘critically insufficient’. It’s hard to imagine he even noticed.
Big promises
Sheinbaum has come in promising to change that. Her banner pledge is 50% renewable electricity by 2030 – a giant leap from a figure closer to 25% today – with $13.6 billion in new clean energy investment. Supporters see this as a continuation of her policies as mayor of Mexico City, which included building the world’s most significant solar PV installation above the famous Central de Abastos market and rolling out Latin America’s first electrified bus network.
But there are reasons to worry, too. She announced her environmental manifesto on 18th March, a public holiday commemorating the 1938 nationalisation of the state’s oil reserves. That piece of political framing was no accident. In addition to renewables, her manifesto looks to increase oil production and refinery capacity, and she vocally supports AMLO’s constitutional target of bringing 60% of power generation under state control. She may not share his ‘drill, baby, drill!’ posturing, but an ‘all of the above’ position on energy speaks to a different sense of political fragility.
President Steinbaum’s direction is not as straightforward as it may seem.
Into the wind
An honest reading of the tea leaves further suggests three countervailing forces are standing in the way of a green revolution.
The first of these is Sheinbaum’s political habits. As the anointed successor of AMLO – who still enjoys 50%+ approval ratings – there are questions about how far she will step out from his shadow. For example, critics claim that a new road bridge which damaged the Xochimilco wetlands (a UNESCO heritage site protected in state law) was rushed through by Mayor Sheinbaum in advance of an environmental impact report. This is eerily similar to the tactics used by AMLO to approve the Mayan Train, a controversial tourism project which will tear up ancient rainforests across the Yucatan Peninsula. Authoritarian, pro-growth technocracy has its gravity.
Sheinbaum’s second problem is economic. She enters office at a challenging time globally facing a record budget deficit at home. Existentially committed to maintaining her party’s signature social spending programmes, particularly the new universal state pension, she may struggle to find spare cash for green investment. AMLO built his expensive brand of leftist populism around an exciting admixture of patriotism, statism and autarky, with PEMEX as the jewel in the crown. It would take a deft politician to voluntarily surrender such an inheritance, particularly one gift wrapped in the national flag.
Heavy is the head
The third problem is institutional, and here again, Pemex may prove Sheinbaum’s undoing. Her team make an excellent case for big-government transformation in the style of Mazzucato’s ‘Entrepreneurial State.’ But there is a real risk that inertia and the deeper networks of Mexico’s political economy turn the tables on the new president, and Pemex becomes not a servant but a master. Does Sheinbaum believe that political will alone can turn a national oil giant into a bastion of clean energy? Mexico is not Denmark.
The new President faces real practical constraints, too. Pemex has nearly $7 billion of debt due for refinancing in 2025 alone. Sheinbaum claims this will be an opportunity to pivot the enterprise towards geothermal, hydrogen, lithium, etc. But the reality is that the spread of Pemex’s largely dollar-denominated debt had widened to 600 basis points by Q1 2024, and it is forecast to soon cost the Mexican state 1.5% of GDP. Sheinbaum can afford neither to nationalise its balance sheet nor allow it to default. If the bond market disagrees with her bright green business plan, her hands may be tied.
This is the dirty reality of climate policy in 2024 – even with a Nobel-winning climate scientist at the helm, significant economies are tough ships to turn. The rest of the world will be watching, with Sheinbaum’s first few years as a test case for progressive green governance. We should all be praying for an upside surprise – so watch this space.
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