Status on Mexico's Bio-Fuel and Renewable Energy Legislation
Submitted by Rogelio López-Velarde and Ruben Almaraz, López Velarde, Heftye y Soria

The Law for the Promotion and Development of Bio-fuels (the “Bio-fuels Law”) was published in Mexico’s Federal Register on February 1, 2008 and became effective on the following day. The Bio-fuels Law establishes the basis and guidelines to promote the production of bio-fuels and the development of infrastructure for its production, transportation, storage, distribution and marketing. Emphasis is made by the statute in the protection of the environment and reduction of air pollution emissions. The Bio-fuels Law also establishes measures for protection of Mexico's self-supply of critical agricultural products, such as corn.

Breakdown of the Bio-fuels Law

The Bio-fuels Law provides that the production, storage, transportation, distribution and marketing of bio-fuels will be subject to a permit to be granted by the Ministry of Energy, for purposes of which the Ministry of Energy has been developing during the last months the criteria, terms, conditions and guidelines for the issuance of such permits. The development of infrastructure required for such purposes will be also subject to the approval of the environmental impact assessment report by the Ministry of the Environment and Natural Resources.

The Ministry of Energy, on the other hand, has been developing a Bio-fuels Introduction Program to foster its use and development, including among others the inclusion of ethanol in gasoline, and the definition of the infrastructure requirements that Mexico will be facing. This program is expected to be issued by the Ministry of Energy during the following months.

This Introduction Program shall establish the objectives, goals and actions necessary for the introduction of bio-fuels in Mexico. This program shall also provide the terms, conditions and regions where the bio-fuels shall be produced and commercialized, among others; it shall also establish provisions applicable to the use of ethanol as additive for gasoline and the introduction measures for the use of bio-diesel. The Bio-fuels Law leaves the door open for this program to include provisions for other bio-fuels such as biogas and for the importation of bio-fuels. The terms and conditions applicable to importation of bio-fuels will be subject to Mexican bio-fuels’ production.

Pursuant to the saving provisions of the Bio-fuels Law, a Bio-fuels Commission was formed on February 27, 2008, and is integrated by the Secretary of Agriculture, the Secretary of the Environment and Natural Resources, the Secretary of Economy, the Secretary of Energy and the Secretary of Finance and Public Credit. This Commission is responsible, among others, for preparing the proposal of the implementing regulations to the Bio-fuels Law. According to the saving provisions of the Bio-fuels Law, the relevant regulations shall be published no later than November 1st, 2008.

Renewable Energy Law

On April 24, 2008, the Green Ecologist Party submitted to Congress the bill for the Law for the Use of Renewable Sources of Energy (the “Renewable Energy Law”). The Renewable Energy Law is aimed at promoting the creation and use of renewable energy sources and establishes the form of participation of the private and public sectors. The main purpose of this initiative is to promote the use of solar, geothermic and wind-power electric energy, in order to reduce the emission of green house gases to the atmosphere and avoid global warming.

The Renewable Energy Law is also aimed at accomplishing the following main purposes:

I. Promotion of the diversification of power generation sources in order to (a) contribute for mitigation of green house gases; (b) strengthen the competition in the energy sector; and (c) ensure power supply.

II. To provide the obligation of Comisión Federal de Electricidad and Luz y Fuerza del Centro (Mexican government-owned power utility companies) to purchase the power generated by the renewable energy sources owned by private parties.

III. Creation of a trust fund for the use of renewable energy sources which shall guarantee the financial solvency for renewable energy projects in order to make them feasible and competitive before traditional power generation sources.

IV. Support local communities where the renewable energy projects will be located through mechanisms of participation, providing funds for their social development.
The bill of the Renewable Energy Law was submitted to the Energy Commission at Congress for its review and analysis which is still pending.