Mexico is uniquely placed to reap the benefits from the global maritime ecosystem’s transition to zero emission fuels over the coming decades through supporting ambitious action through the International Maritime Organization (IMO) (the UN body responsible for international shipping). This week’s MEPC 79 negotiations present a timely opportunity to advance zero carbon propulsion technologies globally, which could help Mexico to attract investment of 36.7 – 52.8 billion pesos in onshore infrastructure by 2030.
Currently, international shipping uses around 300 million tons of fossil fuels every year, representing around 5% of global oil production and around 3% of global greenhouse emissions. To address this, Governments have agreed through the International Maritime Organization to reduce emissions by at least 50% by 2050, which is currently not aligned with the aim to limit warming to 1.5 degrees enshrined in the Paris Agreement.
There is, however, a process underway at the IMO to revise this target towards a higher level of ambition at meetings next year, with many countries and industries calling for the alignment of the Initial IMO GHG Strategy with the Paris Agreement whilst additionally highlighting the importance of ensuring a just, fair, and equitable transition.
For shipping to fully decarbonize it will be important to support this policy action at the IMO and stimulate the shift to scalable, zero emission fuels (SZEFs) , which will be necessary to ensure that shipping’s emissions remain in line with the Paris Agreement. These will, to a great extent, be derived from green hydrogen in the form of fuels including green ammonia and green methanol.
Green hydrogen in Mexico
Green hydrogen, created through using renewable electricity to split water into oxygen and hydrogen, offers a clean alternative to fossil fuels based on renewable energy. Where electrification isn’t feasible, green hydrogen will be required to support the decarbonization of sectors like agriculture, steel, cement, chemicals, aviation, and shipping. As such, it is important for Mexico to identify future hydrogen needs nationally, in addition to exploring green hydrogen as a future export commodity.
Geographically, Mexico is ideally placed to emerge as a key producer of green hydrogen, due to its extensive access to solar and wind resources. According to a recent study published by Ricardo Energy for the P4G – Getting to Zero Coalition Partnership, Mexico has the potential to produce between 932 – 4,992 Terawatt hours per year (TWh/y) of renewable energy by 2030 according to conservative estimates. This capacity massively exceeds the potential opportunity for Mexico to supply the international shipping fleet with SZEF, which would represent around 3.4 TWh/y by 2030 assuming that 5% of the global fleet transitions to SZEFs, which will be necessary to ensure that shipping’s emissions remain in line with the Paris Agreement. Throughout the 2030s and 2040s this demand will then rapidly increase, creating an opportunity to significantly scale this supply further and ultimately capitalize on Mexico’s renewable energy resources by supplying SZEFs.
Supporting these developments could offer additional opportunities for Mexico alongside the supply of green fuels. Firstly, there is strong potential to support sector coupling and develop synergies with other hydrogen intensive sectors like agriculture and cement manufacturing. This would help to aggregate demand across industrial bases, reducing costs and enhancing integration across the economy.
Building out this renewable energy capacity within Mexico could also help to improve energy security by reducing reliance on fossil fuels and energy imports. This would not only curtail emissions, but also improve the resilience of the Mexican economy and industry to global energy price fluctuations.
Enhancing investments in this area could further help to support the creation of long-term sustainable jobs, both within the maritime sector, but also in related industries like energy, infrastructure and through making other industrial processes environmentally sustainable.
Lastly, Mexico can also address the impacts of maritime activities on coastal communities, where local pollutants can have a significant detrimental impact on public health. This is particularly true near large Ports and areas with high shipping activity like Manzanillo or Baja California.
To curtail national emissions and realize these opportunities, Mexico should update national policies to reflect climate commitments and align national and international policy, ensuring that shipping is included as part of the wider domestic decarbonization agenda. Nationally, this could be seen in areas like the development of port plans, maritime strategies, and energy policy to support decarbonization objectives.
Lastly, this week’s IMO negotiations offer an important moment to send the right signals by committing to strengthening ambition levels which enable investment, innovation and is fundamental to an equitable transition. This would ultimately help to ensure that the goals of the Paris Agreement are met and support Mexico in truly realizing the golden opportunity presented by maritime decarbonization.
This article is based on the findings of the Getting to Zero Coalition – P4G Partnership’s report: ‘Shipping’s Energy Transition: Strategic Opportunities in Mexico’
- Bud Darr, Group Executive Vice President, Maritime Policy and Government Affairs, Mediterranean Shipping Company
- Ingrid Sidenvall Jegou, Project Director, Global Maritime Forum
- Pedro Gomez, Head of Shaping the Future of Mobility, World Economic Forum
- Salomon Diaz,Port Decarbonisation Coordinator, WWF México
- Tomás Baeza, Senior Manager, Net-Zero Fuels, ENGIE Impact