Mexico
Members of the Mexican Senate filed a constitutional challenge against the Decree reforming various provisions of the Electricity Industry Law , published in the Official Gazette of the Federation (DOF) on March 9, 2021. They argue that these changes affected free competition, the environment, and the Mexican State's international commitments and obligations regarding the environment and climate change, for the following reasons:
The reform modifies the electricity dispatch order, granting preferential treatment to the state-owned Federal Electricity Commission (CFE), which—according to the congresswomen who filed the lawsuit—would limit private sector participation. This would impede the implementation of measures to promote the energy transition. It also contradicts commitments made in international treaties such as the USMCA and the CPTPP, as it fails to ensure equitable treatment for foreign companies. Furthermore, it modifies previously granted contracts and permits, meaning it has retroactive effect.
Similarly, it is argued that this represents a decrease in the priority given to clean energy, since older CFE plants are now allowed to receive Clean Energy Certificates (CELs). This is inconsistent with the primary objective of the CELs, which was to encourage greater investment in clean energy, not to reward existing capacity. This runs counter to commitments related to the right to a healthy environment, and consequently, to human rights such as housing, health, and internet access, not only due to potential setbacks in environmental matters but also because of the possible increase in utility rates.
All of the above, it is argued, fails a proportionality test that would justify the adoption of such measures. First, it is argued that the reform does not pursue a legitimate aim, but rather seeks to unduly favor CFE. Similarly, it is maintained that it fails to meet the suitability requirement by changing the dispatch order and affecting Clean Energy Certificates (CELs), as this does not guarantee cleaner or cheaper energy. Regarding necessity, it is stated that there are less restrictive ways to strengthen CFE. Finally, the Senate states that it does not meet the proportionality requirement because the costs to the enjoyment of human rights outweigh the state benefits.
The case was resolved by the Supreme Court of Justice of the Nation of Mexico (SCJN) as follows:
Prioritizing CFE. This is not an unconstitutional measure, since the national electricity system is a strategic function of the State, and the change in the dispatch order does not prevent the participation of private entities, but rather reorganizes priorities based on reliability and security criteria.
Regarding non-compliance with the USMCA and the CPTPP, this cannot be analyzed under constitutional arguments, as these are not constitutional provisions. However, it is established that the reform does not prohibit foreign participation, but rather establishes new regulatory conditions that are constitutionally valid.
Revocation of permits and contracts. Acquired rights are not directly affected, but are reviewed under specific criteria, and this responds to reasons of public interest.
Clean Energy Certificates (CELs). The right to a healthy environment is not violated, since the aim is to more broadly integrate sustainable clean energy sources.
The increase in electricity rates is a speculative argument, as no direct or imminent impact on human rights has been demonstrated.
Proportionality test. The reform meets all the required elements: a) legitimate objective: the reorganization of the electrical system responds to guaranteeing reliability, security and energy sovereignty; b) suitability: it was established that allowing greater participation of the CFE can contribute to the stability of the electrical system, particularly in areas where there is no private coverage or reliability; c) necessity: the existence of a clearly less harmful or restrictive alternative was not demonstrated; and d) proportionality, since the benefits of the legal change outweigh the indicated harms, as it does not eliminate private participation or incentives for investment in clean energy, that is, the system was restructured without absolute prohibitions.
As a result of its analysis, the Supreme Court of Justice of the Nation (SCJN) ruled that the Action of Unconstitutionality was unfounded. This validates all the challenged articles, establishing that the State has broad powers to reorganize the National Electric System without violating constitutional principles, human rights, or international treaties, without excluding private participation, and without affecting acquired rights.
Implementation
The reforms made to the Electricity Industry Law were deemed constitutional, and therefore their application was valid and implemented. That law has since been repealed.
Regarding the right to a healthy environment, the initial document presented by the Senators alleges that there is a violation of Article 4 of the Political Constitution of the United Mexican States, as well as the obligations acquired by the Mexican State by signing the Paris Agreement.
Thus, it was argued, on the one hand, that the reform ceased to prioritize the promotion of clean energy sources such as solar and wind power, whose use implies a reduction in greenhouse gas (GHG) emissions. This would give preference to CFE's hydroelectric plants—in this case, the opposition stemmed from their age and the possibility that, despite this, they could still access Clean Energy Certificates (CELs), relegating renewable energy sources implemented by the private sector to a third or fourth place. This, it is argued, discourages investment in the clean energy sector and hinders the energy transition.
On the other hand, it was argued that the reform allows older plants or those without modernization investment to receive Clean Energy Certificates (CELs). In other words, ownership and operational start date requirements are eliminated, thus reducing the value of CELs and discouraging investment in clean energy.
After analyzing these arguments, the Supreme Court of Justice of the Nation (SCJN) ruled that the reform to the Electricity Industry Law does not generate negative effects on human rights because:
The technical requirements for obtaining CELs continue to have the main objective of generating clean energy.
The opening of the CELs market, in itself, does not violate the right to the environment; on the contrary, it can allow the participation of more actors in the fulfillment of clean energy generation.
There is no direct evidence that the implemented changes could cause environmental damage.
The Mexican State has a margin of discretion that allows it to implement public policies.
The use of hydroelectric energy, also considered clean, is encouraged and prioritized.
Federal Senators
Legislative Body: The Congress of the Union, through its Chamber of Deputies as the originating chamber and the Chamber of Senators as the reviewing chamber.
Executive Branch: Federal Executive Power.
Mexico is one of the countries most vulnerable to the effects of climate change. According to the Vulnerability Atlas published by the National Institute of Ecology and Climate Change (INECC), this vulnerability stems from the country's geographical conditions, particularly its location, latitude, and topography. Mexico is one of the world's leading megadiverse countries. With approximately 200,000 different species, this country is home to between 10 and 12 percent of the world's biodiversity .
According to the latest National Inventory of Greenhouse Gas and Compound Emissions (INEGYCEI), which analyzes data from the period 1990-2022, total national GHG emissions in 2022 were quantified at 757,285.76 ktCO₂e. The energy sector contributed the most to emissions generation with 63.4%, followed by livestock farming and the industrial sector.
In that scenario, the need to promote the energy transition stands out, but from a justice-based approach.
Constitution of the United Mexican States:
International Treaties:
Paris Agreement
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
Treaty between the United Mexican States, the United States of America and Canada (USMCA).