Mexico is a large producer of sugar. In a move to capitalize on the growing biofuels markets, and turn some of this sugar into ethanol, the Mexican House and Senate have passed a bill to promote biofuels in Mexico. The bill has been sent to the President of Mexico for review.
Thompson & Knight's Gabriel Ruiz in our Monterrey, Mexico office has written a summary of the bill. An excerpt below explains in general terms the content of the bill.
The Bill states as its primary goal to guarantee the support of the agricultural sector by achieving an energy diversification and sustainable development through the development and promotion of “biofuels”; such term defined as ethanol and biodiesel fuels produced from energetic commodities or subproducts coming from agricultural activities. It also establishes the basic principles to promote the production, distribution and sale of ethanol-based fuel and biodiesel and to facilitate technical and economic incentives for their development. Once the Bill is enacted, specific regulations and norms shall gradually phase-in the use of ethanol in gasoline and biodiesel in diesel fuel. As approved, the Bill establishes the basic requirements private investors will have to meet in order to qualify for economic and technical incentives from the federal, state and municipal governments for infrastructure development. Finally, the Bill charges the President with the direct obligation to promote the use of biofuels through the use of any available economic and international law instruments, specifically mentioning the clean development mechanisms contained in the Kyoto Protocol to the United Nations Framework Convention on Climate Change.
If this bill is approved by the President, it would open up substantial investment opportunity in biofuels markets in Mexico. It could also lead to the generation of carbon credits under the Kyoto Protocol to be sold to contries such as those in the EU where global warming and climate change legistation requires reduction of emissions of greenhouse gases and permits the purchase of reduction credits to meet these limitations. This dual revenue stream and the proximity to the US ethanol market may lead to a substantial biofuels industry in Mexico.
