Idheas Litigio Estratégico v Centro Nacional de Control de Energía (CENACE) and Secretaría de Energía (SENER)

Summary:

In August 12, 2021, the Mexican Center for Environmental Law (CEMDA) and Green Peace, challenged a series of regulations that involved the setting of tariffs for renewable energy projects under legacy contracts. By an order of the District Court, the suit was divided in multiple trials due to the number and scope of the different regulations that were challenged. Among them, the plaintiffs challenged the Agreement and its Annex to guarantee the efficiency, quality, reliability, continuity, and security of the National Electric System in light of the SARS-CoV2 (COVID 19) pandemic, emitted by the National Center for Energy Control (CENACE). The Agreement argued that that the intermittency of renewable energy projects jeopardized the reliability of the National Electric System. As such, it ordered CENACE to limit the operation of intermittent energy projects and to suspend and reject pre-operational trials of intermittent wind and photovoltaic power plants in the process of commercial operation.

The plaintiffs considered that the Agreement violated the right to a healthy environment, enshrined in the Mexican Constitution, since it prevented the participation of renewable energy projects in the electric market which would lead to an increase in greenhouse gas emissions which contribute to climate change. Plaintiffs also argued that the Agreement prevents achieving an energy transition, as well as Mexico’s international commitments to address climate change since it imposes restrictions on renewable energy projects.

On April 19, 2021, the Second District Court in Administrative Matters Specialized in Antitrust, Broadcasting and Telecommunications ruled in favor of the plaintiffs, concluding that CENACE did not have the authority to emit the Agreement and that it transgressed the individual and collective dimensions of the right to a healthy environment enshrined in the Constitution and several international treaties. On one hand, more greenhouse gas emissions would have an impact on human health. On the other hand, the court considered that the Agreement would prevent Mexico from fulfilling its commitments under the Paris Agreement, Kyoto Protocol and United Nations Framework Convention on Climate Change since it limited privileged electricity generated by fossil fuels over renewable energy projects. Thus, even if there was no certainty of the degree of the risk or harm that the Agreement would cause, a proper application of the precautionary principle demands that the regulation is struck down. The Court also emphasized that in these cases, there is a reversal of the burden of proof, which forced authorities to prove that the Agreement would not cause any environmental damage. Finally, the court considered that the Agreement was contrary to the progressive nature of environmental protection envisaged by the Mexican legal system, which limited the possibility of unjustifiably reducing or modifying any already achieved level of protection. This was the case since the 2015 the Energy Transition Act orders authorities to set goals so that electricity consumption is increasingly satisfied by economically viable clean energy sources. The Act orders a minimum of 25% of the demand for electricity satisfied by clean energy sources by 2018; 30% by 2021, and 35% by 2024.

The authorities appealed the decision but the First Circuit Court in Administrative Matters Specialized in Antitrust, Broadcasting and Telecommunications dismissed the appeal.

At Issue: Whether The Agreement and its Annex to guarantee the efficiency, quality, reliability, continuity, and security of the National Electric System in light of the SARS-CoV2 (COVID 19) pandemic transgressed the right to a healthy environment and constitutes a setback on energy transition goals.