Head Of Mexico City Government Compares Lithium... [REPACK]
Mexican president Andrés Manuel López Obrador defends his proposed electricity reform at a press conference this November. New rules would prohibit further concessions on lithium exploitation and give the government more control over the resource. (Image: Mario Guzman, EFE / Alamy)
Head of Mexico City government compares lithium...
There are currently eight concessions granted by previous governments for the possible extraction of lithium. Although López Obrador maintains that these will be respected, for that to happen companies must prove to the Federal Electricity Commission and the Ministry of Energy that they have already started the exploration process and meet the requirements to start production. The president has remained firm in rejecting new concessions, even if his reform is not approved.
To help overcome these barriers, 71% of EV100 members support more favourable EV procurement tax benefits and 70% favour more supportive policies at state, regional and city government levels. Sixty percent of the member companies support government targets to phase out petrol and diesel vehicles.
Further decline in prices of Li-ion battery and its improved capacity would partly depend on continued R&D efforts. Fiscal support can catalyze such efforts by improving their financial returns, but governments must also account for the significant uncertainty of the cost of such support. A review of policies in countries playing major roles in Li-ion battery development shows that direct subsidies are generally favoured over tax instruments as a form of fiscal support.7 It could partly reflect the fact that subsidies give governments more control in terms of the recipients of the support as well as the direction of innovation. The nature of direct subsidies is therefore more discretionary, and its effectiveness relies on how well governments can target, based on relevant information on the size and reach of direct and spillover effects of selected R&D activities.
In terms of market-based instruments, governments can improve overall economic returns to the installation of Li-ion batteries by introducing monetary rewards at different points. First, direct subsidy or preferential tax treatment can be given when Li-ion batteries are installed. For example, the German government and its development bank, KfW, provide low-interest loans and repayment bonuses for batteries in conjunction with photovoltaic systems (Potau et al., 2018). Levy and grid tariff exemptions are also given to grid-connected electricity storage facilities. For electric vehicles, countries introduced measures such as exemptions or rebates on road toll to accelerate their adoption.
For electric utilities, governments could require utility or grid operators to install a minimum capacity of battery storage. Such requirements can help to develop pilot projects and promote industry learning (Stenclik et al., 2018). Policymakers can also invest in improving public understanding of battery storage and its related benefits. This could help attract those that have shied away from decentralized solutions such as battery storage due to concerns over reliability, economic viability, safety, and data security, among others.
While less than 2% of Mexico's population lives below the international poverty line set by the World Bank, as of 2013, Mexico's government estimates that 33% of Mexico's population lives in moderate poverty and 9% lives in extreme poverty, which leads to 42% of Mexico's total population living below the national poverty line. The gap might be explained by the government's adopting the multidimensional poverty method as a way to measure poverty, so a person who has an income higher than the "international poverty line" or "well being income line" set by the Mexican government might fall in the "moderate poverty" category if he or she has one or more deficiencies related to social rights such as education (did not complete studies), nutrition (malnutrition or obesity), or living standards (including elemental, such as water or electricity, and secondary domestic assets, such as refrigerators). Extreme poverty is defined by the Mexican government as persons who have deficiencies in both social rights and an income lower than the "well being income line". Additional figures from SEDESOL (Mexico's social development agency) estimates that 6% (7.4 million people) live in extreme poverty and suffer from food insecurity.
In April 2022, the Senate passed a law that nationalizes the lithium mining industry in the country. The federal government will have a monopoly on all new lithium mines in the country, but existing operations will be allowed to continue in private hands. Critics of the move argue that the constitution already does this and that the government lacks the technical capacity to mine the major reserves, which are mostly in clay deposits that are difficult to mine. The government made a similar failed attempt to nationalize uranium mining in the 1980s.
Using relatively recent night light data and electricity consumption in comparison with Gross County Product, the informal sector of the local economy in Veracruz state is shown to have grown during the period of the Fox Administration though the regional government remained PRI. The assumption that the informal economy of Mexico is a constant 30% of total economic activity is not supported at the local level. The small amount of local spatial autocorrelation that was found suggests a few clusters of high and low literacy rates amongst municipios in Veracruz but not enough to warrant including an I-statistic as a regressor. Global spatial autocorrelation is found especially literacy at the macro-regional level which is an area for further research beyond this study.
The United States, led by the Department of Energy (DOE), can be a leader in gathering partners around the hemisphere. It can bring to bear a wide range of US government tools in an effort to dramatically enhance energy investment in the hemisphere and thereby expand energy access, affordable power, energy security, and national prosperity. By sharing best practices and lessons learned, enabling informed conversations and promoting cooperative engagement on overcoming investment barriers, highlighting investment opportunities, and supporting its neighbors and friends with technical assistance, capacity building training, and mustering the many programs that can support energy development, the United States can help raise the global competitiveness of the hemisphere, advance its shared prosperity, and improve US national and energy security as a result.
This report recommends a new US energy strategy for the Western Hemisphere to achieve these ends. The report itself is the product of an extensive hemispheric collaboration. We held strategy sessions, roundtables, and one-on-one meetings with government leaders from Argentina, Brazil, Canada, Colombia, Guyana, and Mexico, as well as private sector investors, financiers, and civil society members from these countries and the United States. This spirit of partnership is deeply embedded in the report, as we hope it will be in the partnership ahead.
To its advantage, the hemisphere is well positioned to overcome these headwinds and attract international capital, if it chooses to compete. The nations of the hemisphere are engaged in a major energy transition. They are increasingly seeking to modernize and decarbonize all aspects of their energy systems, develop their native natural resources, and expand their energy transportation networks. Many of these nations seek to extend reliable, affordable, and industrial-scale power access to support economic and human development throughout rural and remote areas in a bid to enhance local prosperity and narrow the rural-urban divide. In the electricity space, improvements in solar and wind technology have made these fuel sources more attractive to governments and utilities.
Expanding the network of thirty-four oil and gas pipelines and seventy-four electricity transmission lines that cross the Canada-US border will strengthen regional energy security by facilitating flows of oil, gas, and low-carbon electricity between Canada and the United States, allies who share market-based approaches to energy development. Given the high levels of investment in government research and development in energy in the United States and Canada, there is great opportunity to coordinate, collaborate, and harmonize these projects and optimize efforts. Strong bilateral cooperation is already underway in the area of carbon capture, utilization, and storage (CCUS); hydrogen; advanced materials for clean energy; and next generation nuclear, such as small modular reactors. Canada also works closely with partners throughout the Americas, both through multilateral fora like the Clean Energy Ministerial and bilateral agreements with Chile, Colombia, Guyana, and Mexico.
Developing targeted energy subsidies. The question of energy subsidies, particularly for fossil fuel-based energy, is a serious and unresolved dilemma throughout Latin America that is at the crux of energy and economic development challenges. In the Americas, as in other parts of the world, recent efforts to reform pricing for energy (especially for end-use consumption, such as residential electricity) have resulted in unintended economic burdens that often disproportionately affect low-income groups. Energy prices and appropriate compensation (for a variety of fuel types and throughout their value chains) can be difficult to get right, but there is growing expertise, especially among the major international financial institutions, on how governments can achieve a proper and mutually beneficial balance. Reforming subsidy and pricing mechanisms merits its own workshop where the United States could convene international financial experts with private sector investors and partners to develop better paths forward for governments trying to better target subsidies and improve their fiscal frameworks. The DOE should also seek interagency partners with deep expertise in finance and commodity pricing to support this aspect of the strategy; the US Department of the Treasury, for example, is especially well-equipped to partner on this front. 041b061a72