Pemex and Mexico’s NDC 3.0: Seizing the Moment for Climate Leadership

President Claudia Sheinbaum has pledged that Mexico will reach net-zero emissions by 2050. To achieve this, the country’s updated NDC must go beyond technical greenhouse gas (GHG) reduction targets. It should provide a clear roadmap that links climate action to real improvements in people’s lives, including more stable jobs, stronger communities, and a future-ready economy.

In this context, Pemex must play a central role. The energy sector accounts for 64% of the country’s GHG emissions, and Pemex is responsible for 95% of hydrocarbon production and the bulk of associated infrastructure. In Mexico, to talk about hydrocarbons is essentially to talk about Pemex.

Why Pemex?

International experience shows that state-owned oil companies are still unprepared for the challenges of the energy transition, including declining oil demand. Governments have a decisive role to play. By setting clear policy signals and creating financing mechanisms, they can help these companies shift toward new business models.

The Mexican state holds a particularly strong influence over Pemex, given the company’s heavy reliance on government support. In 2025 and 2026 alone, Pemex faces debt maturities of US$24 billion, while the proposed 2026 budget allocates MXN 263.5 billion for debt servicing. That figure is double the 2025 allocation, equivalent to half of the resources earmarked for senior citizens’ pensions and six times the proposed environmental budget.

A stronger, more decisive commitment from Pemex would send a powerful signal that Mexico is willing to align its state-owned company with its decarbonization and just transition goals. Such a step would not only reinforce national climate ambition but also build confidence among the international community, the financial sector and the public.

Integrating Pemex into Mexico’s NDC 3.0: three priorities

1. Reduce methane emissions

Methane is 25 to 80 times more potent than CO₂ and poses serious health risks to communities living near oil facilities. Between 2012 and 2021, Pemex’s largest emission increases came from this gas.

Between 2021 and 2024, Pemex’s methane emissions fell by 29 percent. The company launched its first sustainability plan and voiced its commitment to the World Bank’s Zero Routine Flaring by 2030 initiative. However, Pemex’s methane output remains higher than a decade ago and above that of its international peers. Cutting these emissions is both urgent and strategic, as proven technological solutions exist and, in many cases, are cost-effective. The updated NDC offers the right framework for Pemex to adopt absolute, phased reduction targets, improve measurement and transparency, and join the Oil & Gas Methane Partnership (OGMP 2.0). Doing so would position Mexico as a global leader in methane mitigation.

2. Manage transition risks

Pemex ranks 11th among 58 state-owned oil companies most exposed to transition risks, according to a recent NRGI analysis. Up to US$10 billion in assets could become uneconomic under the International Energy Agency’s Announced Pledges Scenario, posing major risks for public revenues, jobs, and communities tied to the oil industry.

Mexico's updated NDC should respond by promoting transparent risk assessments, redirecting investments toward lower-carbon, higher-return projects, encouraging business diversification, and fostering joint ventures with the Federal Electricity Commission (CFE). It should also establish stronger corporate governance mechanisms under the Ministry of Energy’s (SENER) oversight to ensure planning is consistent with sustainability goals.

3. Just transition plans for oil-producing regions

States such as Campeche and Tabasco, heavily dependent on oil revenues, are already experiencing the impacts of declining production. To ensure no one is left behind, Mexico’s NDC should include just transition plans and the responsible decommissioning of infrastructure. This roadmap should prioritize economic diversification, workforce retraining, tailored educational programs, and greater transparency on environmental and health impacts.

These measures are in line with the outcomes of Mexico’s Local Conference of Youth proposals (2025 LCOY) and the Ministry of the Environment and Natural Resources’ (SEMARNAT) agenda for NDC 3.0, can foster a transition that delivers tangible benefits to the communities most dependent on oil.

Pemex at the center of Mexico’s climate action

The NDC gives Mexico a critical chance to raise its climate ambition, demonstrate international leadership, and put Pemex on a sustainable path. Explicitly including the company would send a clear signal of commitment to a just and orderly transition, in step with the global call to move beyond fossil fuels.

For decades, Pemex has been at the center of Mexico’s energy policy. It must now be at the heart of its climate response. This is the moment to show that commitment and accelerate progress toward net-zero emissions by 2050, building a more equitable, transparent future that delivers for all Mexicans.