Wednesday, December 7, 2022

US senators call for stronger response to Mexico’s energy policies, electricity reform

Four United States senators have raised concerns about energy policy in Mexico, calling on the U.S. government to speak out “more forcefully” in favor of renewable energy generation.

In a letter to U.S. Secretary of State Antony Blinken and Secretary of Energy Jennifer Granholm on Tuesday, a group of Democratic Party senators including Senate Foreign Relations Committee chairman Bob Menendez expressed concerns about President López Obrador’s “actions to subvert private-sector renewable energy development efforts in Mexico in favor of state-owned fossil fuel industries.”

Menendez, Brian Schatz, Tim Kaine and Jeff Merkley also urged the Biden administration to “more forcefully speak out in support of renewable energy production that will benefit both of our countries.”

Their appeal came ahead of Granholm’s visit to Mexico this week, during which she will meet with López Obrador, Energy Minister Rocío Nahle and other officials.

The senators asserted that Mexico last month submitted a “woefully underachieving” contribution to the Paris Agreement, noting that it has only committed to reducing emissions by 22% and black carbon emissions by 51% by 2030.

U.S. Secretary of Energy Jennifer Granholm will visit Mexico and meet with President López Obrador this week.
U.S. Energy Secretary Jennifer Granholm will visit Mexico and meet with President López Obrador on Thursday.

“Furthermore, Mexico’s Chamber of Deputies is likely to vote in mid-April on a bill that would roll back the 2014 energy reform law that allowed private and foreign investment in Mexico’s energy sector and restore the dominance of the state-owned Federal Electricity Commission (CFE) over the energy sector,” they wrote.

Approval of the bill – which has been widely criticized inside and outside Mexico – is far from guaranteed as two-thirds congressional support is required and the ruling Morena party doesn’t have a supermajority in the upper or lower house.

But the U.S. senators nevertheless warned of numerous adverse consequences if it does get through Congress.

If enacted, their letter said, the Mexican government would cancel renewable energy permits, contracts, and certificates; eliminate federal energy regulatory agencies that provide checks and balances on state energy companies; guarantee that CFE controls at least 54% of the electricity market; reshuffle private and state-owned energy production quotas to favor fossil fuel production; and establish the state as the sole implementer of Mexico’s clean energy transition.

“Perhaps more detrimental to the Biden administration’s priorities, this legislation would prohibit concessions to mine strategic minerals like lithium and copper,” the senators added.

“This policy would contradict the USMCA’s prohibition of new investment restrictions and exacerbate national security concerns related to critical mineral scarcity. It would also threaten at least [US] $44 billion in private investment in Mexico’s energy sector, will negatively impact U.S. private sector investment in Mexico, and is antithetical to the historically strong U.S.-Mexico economic relationship,” they said.

“We appreciate Ambassador Salazar’s public expression of concern and engagement on this issue and urge the Biden administration to more forcefully express concerns about President López Obrador’s detrimental fossil fuel agenda,” the Democrats said.

“Public reporting indicates that President López Obrador interprets the Biden administration’s relative public silence on this issue as indifference or tacit approval for his government’s decision to prioritize fossil fuel development over renewable energy,” they said.

“… We strongly encourage you both to make this issue a priority topic for discussion during this important year for climate action, and we especially urge Energy Secretary Granholm to raise this matter with Mexican government counterparts during her January visit to Mexico.”

Granholm is scheduled to meet with López Obrador at 6 p.m. Thursday and will participate Friday in a roundtable discussion at which Minister Nahle, Deputy Foreign Trade Minister Luz María de la Mora and Mexico City Mayor Claudia Sheinbaum will be present.

López Obrador has indicated that he is willing to discuss any issues the U.S. energy secretary brings up, including his proposed electricity reform.

He said Thursday that he would explain why is he is pursuing the reform, and thank the U.S. government for being respectful of Mexico’s independent energy policy and approving Pemex’s purchase of Shell Oil Company’s share of the jointly-owned Deer Park oil refinery near Houston, Texas.

With reports from El Universal 

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