Social economy, the just energy transition and inequality in Mexico

Installation de panneaux solaires à Teluca, au Mexique. — © Bénédicte Desrus / AFD

Project start date: 2024

Status
Completed
Project end date: 2025
AFD financing amount: 59000
Country and region: Mexico
Partners: Instituto Nacional de la Economía Social (INAES), Mexico, Centro de Estudios Espinosa Yglesias (CEEY)
Research program: Research on inequalities

The energy transition is a challenge and a necessity for Mexico’s economic transformation. What role can socially owned renewables and energy cooperatives play in enhancing the livelihoods of the most vulnerable and in reducing inequality?

Context

The energy transition is a challenge and a necessity for Mexico’s economic transformation as, on the one hand, the country spends 7.6% of its GDP on fossil fuel subsidies and, on the other hand, in 2020 it was estimated that the economic impact of climate disaster increased by 202%. In order to achieve a successful energy transition and secure a sustainable growth path, Mexico needs to modernize its energy sector, reduce reliance on fossil fuels, and ensure sustainability. However, it is necessary to start from the territory, involving communities in the co-construction of resilience and the strengthening of local productive chains. Community and cooperative models play an essential role in promoting the creation of collective businesses managed in a democratic and solidarity-driven manner.

An example of just transition opportunities are energy cooperatives. They are a clear and promising model that involves local communities in the production, distribution and consumption of renewable energy, promoting decentralization and democratization of energy, especially in those territories historically and systematically excluded.

However, research conducted in Mexico during the first phase of the Research Facility on Inequalities showed low wealth sharing and limited social mobility in the country. In this context, it is necessary to address the just energy transition from an intergenerational social mobility approach and a social perspective to ensure benefits for the whole society.

This work is also part of AFD's dialogue with the Mexican authorities on options for diversifying the economy and reducing inequalities.

This project is part of the Extension of the EU-AFD Research Facility on Inequalities. Coordinated by AFD and financed by the European Commission, the Extension of the Facility will contribute to the development of public policies aimed at reducing inequalities in four countries: South Africa, Mexico, Colombia and Indonesia over the period 2021-2025.

Find out more about the Extension in Mexico

Objectives

In partnership with the Centro de Estudios Espinosa Yglesias (CEEY) and in collaboration with the National Institute of the Social Economy (INAES), this research project aims to develop a conceptual and analytical research input for a better understanding of the role that renewable energy cooperatives can play in reducing inequality and increasing social mobility, and how they can be financed.

This input will:

Conceptualise the just energy transition approach in the area of existing structural inequalities;
Make a diagnosis from the perspective of intergenerational social mobility, as well as from the perspective of social and solidarity economy, and its relevance in the framework of just transitions, in order to establish identification criteria, social selection and prioritisation of projects;
Use this diagnostic to propose criteria for the identification and selection of projects that prioritise the populations with the greatest disadvantages of origin (with the least space for social mobility), given the requirement of «no losers» of the just transition;
Review and articulate technical issues related to decentralised energy and distributed generation, given their importance in the social economy in the just energy transition;
Review the current INAES projects related to the subject in order, where appropriate, to guide the construction of identification and selection criteria.

Method

The research team will first conduct an exhaustive review of literature focused on environmental justice, climate justice, social mobility applied to environmental justice and intergenerational environmental justice. The literature will be analysed from the perspective of the energy transition and the intersection of these issues.

Based on this review of literature, researchers will develop a conceptual framework to understand the just energy transition in the field of current structural inequalities. It will also explain how this conceptual framework can be relevant for public policy decision-making.

The research team will also identify information gaps and research needs, with a special focus on the study of just energy transitions.

Research findings

You will find below the research paper related to this project: Just Energy Transition, Structural Inequities, and Social Mobility: The Case of Mexico

Mexico’s energy transition unfolds in a context of deep structural inequalities and persistently low social mobility. While most households have electricity, large disparities remain in affordability, reliability, and the capacity of energy access to expand capabilities and opportunities. Using household survey data, we document inequities in access to energy services and show how low-income households face disproportionate burdens that constrain educational and occupational mobility. We then explore how SSE-based models, particularly energy cooperatives, can improve affordability, reliability, and community participation in energy governance. A case study of a fishing cooperative in Yucatán illustrates how renewable energy projects may both alleviate deprivation and foster upward mobility. We argue that embedding distributive and procedural justice into Mexico’s energy transition is essential for inclusive and sustainable development.

Download the publication