MEXICO CITY ( Associated Press) – Electricity reform promoted by President Andres Manuel López Obrador could violate treaties between the United States, Mexico and Canada, and put billions of dollars in investment at risk, US officials said during a meeting that he had with the Mexican authorities.
This was pointed out by the US embassy on Friday when reporting in a statement on points discussed by Washington’s climate envoy, John Kerry, at a meeting with López Obrador and other Mexican officials the day before.
During the visit, Kerry and US Ambassador Ken Salazar reiterated “significant concerns” that Washington has raised about both a proposed constitutional amendment to Mexico’s energy policy and changes to energy law, and that reform would mean “a letter to states that a possible breach of fundamental obligations of the trade agreement, and would jeopardize billions of dollars in potential investment in Mexico and an increase in greenhouse gas emissions.
US and Mexican officials met on Thursday amid disagreements over an electricity reform that seeks to limit foreign-built renewable power plants and give majority market share to Mexico’s state-owned utility.
López Obrador held a cordial meeting with Kerry, who is stuck in Congress, but appeared unwilling to back down from his offer.
Although he did not address the differences, the president offered foreign companies the opportunity to invest in plans to build natural gas liquefaction plants in southern Mexico, possibly to export LNG to Europe or Asia.
Mexico has to import gas, as it does not produce enough to meet its needs, let alone export, so the plan involves pumping natural gas from the United States to ports in southern Mexico, cooling it To do this, it has to be liquefied and contain cargo. ships
“There are many possibilities for investment,” López Obrador said ahead of the meeting with Kerry. “We have excess gas from purchases through (US Gas) pipelines, we have land, we have ports in Salina Cruz, Coatzacoalcos.”
López Obrador has vowed to pursue changes to the electric power industry despite US concerns that they could close markets, reduce competition and potentially violate a three-way free trade agreement between the two countries and Canada. Can
United States Trade Representative (USTR) Catherine Tay told senators in Washington on Thursday that she is “very concerned by the legislative and regulatory developments in the Mexican energy industry that we have seen in recent months. My team and I at USTR, as well as Most of the U.S. government as well has raised these concerns regularly and directly with our counterparts in the Mexican government.”
According to Tay, energy companies and environmentalists “have joined in expressing their concern with what is happening in Mexico, particularly with regard to the competitiveness of the North American energy market as well as the competitiveness of the Mexican energy industry.”
The legislative changes would benefit the Federal Electricity Commission, a state-owned company, against foreign producers, which is banned in the North American Free Trade Agreement (USMCA).
Tai said, “I have informed Mexico and I can assure you that at USTR we are studying all possible options based on the USMCA to deal with this situation, so that the USMCA can work for our partners and protect the environment in all three countries.
Ron Wyden, a Democratic senator from Oregon, said Mexico is considering legislation to “concentrate market and regulatory authority in the hands of the state power company. This could mean a greater focus on fossil fuels with limited opportunities for clean energy providers.” Can focus.”
“Therefore, Mexico’s new reforms are a blow or two against environmental progress in the US,” Wyden said. “Not only are these a setback in the fight against the climate crisis, but they also deny American companies in the Pacific Northwest, for example, a fair deal in the Mexican market.”
After a meeting in February, Kerry expressed “significant concerns” about the bill, but López Obrador responded by assuring that the proposed changes did not affect the treaty “at all”.
US companies have complained about the constitutional changes proposed in October. The legislative amendment is still in the Mexican Congress, where López Obrador needs the two-thirds majority he does not yet have for approval.
The changes would guarantee a majority market share for state power plants, which typically burn oil or coal, while restricting private wind, natural gas and solar plants to a minority share of the market.
Many US companies operating in Mexico have invested in cleaner power plants or rely on cheaper power generation.
But López Obrador’s attachment to fossil fuels is also an underlying factor. He often recalls his youth in the state of Tabasco, an oil-rich region on the Gulf of Mexico, and has invested in oil refineries. These often produce dirty fuel oil, which must be burned in the state’s power stations as some other buyers now demand.
The October bill would repeal the contracts by which 34 private plants sell power to the state grid. In addition, it declared “illegal” another 239 that sell directly to corporate customers. Most of them run on renewable energy or natural gas.
The DOC would also cancel several long-term energy supply contracts as well as preferential purchase programs for clean energy, which would affect foreign companies.
This leaves private natural gas plants near the bottom, ahead of only government coal plants, in terms of rights to sell electricity to the grid, even though they make it about 24% cheaper.
