A news item that has caused justified indignation is the state-owned Federal Electricity Commission (CFE)’s purchase of 2 million tons of coal from producers in the coal-mining region of Salinas, in Coahuila state, for over $2 billion pesos (just under US $100 million). This acquisition has been condemned for a simple reason: the CFE, just like all Mexicans and all human beings, should get the message that the use of coal in power generation should not continue for reasons related to air quality, public health and climate change.
The CFE knows perfectly well that it no longer needs the coal-fired power plants in Coahuila, near the U.S. border, to meet demand for electricity and it could easily withdraw them from use. This has been proven in Mexico’s wholesale electricity market, whose rules establish that power-generation costs determine the order in which the country´s power generation plants are dispatched.
Based on that criteria, power plants other than coal-fired, whether they are owned by CFE or by private power generators, such as gas-fired combined-cycle plants, conventional termal plants or renewables, have to be dispatched first. In practice, Coahuila´s coal-fired plants have become cold-reserve generation. They are not being fired up, because they are not needed.
In spite of this, the CFE has bought a large amount of coal from the Coahuila producers. Apparently, the transaction was arranged by Armando Guadiana, President of the Senate Energy Commission, member of the ruling Morena party and a coal-mining entrepreneur.
The CFE’s coal-fired plants also form part of a falacious government logic, which states that, in order to ensure the reliability of the power grid, the oldest thermal plants belonging to the CFE ought to be dispatched more often. This is a complex topic that has been debated widely in the light of decrees issued by the Energy Ministry and the grid operator, known as Cenace. These decrees on power grid reliability would seem to be more focused on justifying using the CFE’s older power plants than on improving the operation of the power grid.
(Another hot topic in public opinion is the use of fuel oil in the CFE’s thermal plants, which has been criticized on health and environmental grounds. It should be noted that the coal-fired plant at Petacalco, in Guerrero state –the country’s biggest, which uses imported coal– is a dual plant which is now being used to generate power by burning fuel oil. In this way, it keeps the refineries operating at state-run oil company Pemex, given that power generation is the only outlet for this residual product of refining processes).
There is a presidential ruling, dated May 4, 2019, ordering the CFE to purchase coal from the Coahuila producers based on five principles: no corruption, no wheeling and dealing, preference given to small coal producers, selling coal and not dirt (“honesty”), and fair prices. As is normal practice in this federal administration, the environment is not taken into account by President Andrés Manuel Lopez Obrador or by the CFE.
It is true that 30 percent of the world’s power generation (principally in China) is still fired by coal. But that should not be an excuse for the CFE to do it, having other alternatives. Britain abandoned coal-fired generation decades ago. In the United States, coal-fired generation has collapsed thanks to massive use of natural gas and rapid growth of renewable energy. Indeed, some nations, such as Norway, Portugal and Uruguay, already operate their power systems only with renewable energy.
New generations understand spontaneously that being an environmentalist is common sense, and that not being one or not caring for the environment is deplorable. Without a doubt, there are major economic and social problems still to be resolved in the coal-mining region of Coahuila state, but the environment is also a priority.
The federal and the Coahuila state governments, as well as the CFE, should understand that it is no longer acceptable to burn coal and that it is not a real solution to problems. Necessarily, even if it is difficult, other options of economic wellbeing have to be found for communities in the region. At the same time, the CFE should give priority to new technologies and to new policies for clean power generation.
* David Shields is an energy industry analyst. His e-mail: david.shields@energiaadebate.com A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
