Closing Implementation Gaps: Recommendations for Pemex to Meet its Emission Reduction Goals

In March 2024, the Mexican national oil company Pemex published a new sustainability plan laying out how it hopes to bring down emissions of methane and other greenhouse gases (GHGs) associated with the production of oil and gas.

While this is an important step forward, there are good reasons to be skeptical over whether the company will meet these goals. Pemex has made similar plans in the past, which have not been implemented. In this brief, we explore Pemex’s recent emissions history and reflect on why the costs of not following through on these latest commitments may be higher than ever before for the company and the citizens of Mexico. As a new administration comes to power in October 2024, we suggest five actions that Pemex and the government can take to ensure that the company meets its latest goals to reduce emissions of methane and other GHGs.

Swelling pressure to reduce methane

Pemex’s sustainability plan comes as a combination of market forces and global climate commitments linked to the energy transition are forcing oil and gas producers to tackle their GHGs. Producers cannot escape the fact that the use of oil and gas as fuels creates around 30 percent of total GHGs generated every year. For the industry as a whole, this means that there is no way to address the problem of GHGs without simply producing less. In this context, companies that want to survive will need to diversify away from fossil fuels, or position themselves with sufficiently low-cost assets to remain as one of the few competitive “last men standing”. However, as we explore in a sister brief, this latter option would be difficult for Pemex, given its high costs, declining reserves and high debt.

On the path to right-sizing, oil and gas companies also face pressure to address the operational emissions that stem from their production and distribution activities. Also known as scope 1 and scope 2 emissions (see box 1), these make up a further 10 percent of total global GHGs. At this scale, their magnitude alone is enough to put them in the spotlight. But operational GHGs in oil and gas are drawing special scrutiny thanks to growing consensus among climate experts that addressing them is one of the most straightforward and cost-effective options the world has to reduce global GHGs by 2030. Oil and gas operational GHGs largely stem from venting and improper flaring of excess or unwanted gas, and so-called “fugitive” emissions released from infrastructure leaks in pipelines, refineries and other downstream facilities.

About half of these GHGs are methane, which is the main component of gas.1 This represents a significant wasted economic opportunity for Pemex and the Mexican people, given its potential for sale or use as an energy source. But it also brings grave climate impacts. Methane is a particularly potent GHG, with a warming potential up to 80 times higher than carbon dioxide over a 20-year period. There is therefore broad consensus among governments, international institutions and investors that rapid and sustained reductions in methane emissions are key to limiting global warming in the short term. This is particularly true for the upstream oil and gas sector, which is responsible for around 25 percent of all man-made methane.

Summary of recommendations

We make five recommendations that the company and the new administration can implement to help Pemex stick to its plans:

1. Targets. Pemex should establish short-term targets to track and demonstrate progress towards its medium- and long-term goals.
2. Transparency. Pemex should publish transparent monitoring data to show progress towards short-, medium- and long-term targets. This data should be sufficiently granular to be used by local stakeholders, including civil society, communities and government.
3. Engagement. Pemex should nurture a critical mass of informed stakeholders that can build momentum and maintain pressure on the company and the Mexican government to stick to their goals.
4. International initiatives. Pemex should seek support and promote public accountability through membership of key international initiatives on methane and other GHGs.
5. Enforcement. The Government of Mexico should empower enforcement authorities to stand up to Pemex. The regulators, currently Comision Nacional de Hidrocarburos, and the environmental regulator, Agencia de Seguridad, Energía y Ambiente, should have sufficient autonomy, capacity and budget to do so. They should be able to levy fines that are large enough to serve as a deterrent.