Mexico’s president wants to raise investment in fossil fuels while limiting private wind, natural gas and solar power.
The United State’s climate envoy John Kerry said the US wants to work with Mexico to boost renewable energy use in North America amid concern about the Mexican government’s efforts to increase state control of the electricity market.
Kerry’s visit on Wednesday came after Mexican President Andres Manuel Lopez Obrador pledged to forge ahead with changes to Mexico’s power sector, increasing investment in fossil fuels while limiting private wind, natural gas and solar plants to a minority market share.
Kerry said the US government is ready to be “as helpful as we can be” to push Mexico to ramp up its use of electric vehicles and renewable energy, as companies around the globe step up efforts to meet climate goals.
“Mexico can play a vital, extraordinary role in our efforts to combat the climate crisis,” Kerry said.
“What we want to do is work with Mexico in a way that will strengthen … the ability of the marketplace to be able to be open and competitive,” Kerry said during opening remarks on his visit to Mexico City.
Kerry’s trip comes amid high tensions over Mexico’s plan to favour its state-owned electricity company and limit private and foreign firms that have invested in renewable energy. Lopez Obrador has pitched a bill that has sparked criticism due to fears that the measure undermines wind and solar power investment at a critical time for companies striving to improve their clean energy mix.
Lopez Obrador sought to downplay the frictions Tuesday, saying “there are opportunities for investment. The only thing we want to do at the same time is strengthen the CFE,” Mexico’s state-owned Federal Electricity Commission.
The commission runs plants that burn coal or fuel oil produced by Mexico’s state-owned oil company. It also runs some solar, nuclear and hydroelectric plants.
The Mexican president is a big supporter of government firms and fossil fuels such as oil. But he denied Mexico did not want clean energy, and suggested the US might offer funding for his plans to increase Mexico’s hydroelectric power capacity.
“The thing is to reach agreements with the US government on investments … getting low-interest loans, at interest rates like they charge in the United States, that would be an investment in favor of the environment,” Lopez Obrador said.
Last year Lopez Obrador proposed a constitutional reform to restrict sales by private power generators and favor Mexico’s state-owned utility company. The bill is stuck in congress, where it needs a two-thirds majority.
The bill submitted in October would cancel contracts under which 34 private plants sell power into the national grid. The plan would also declare “illegal” an additional 239 private plants that sell energy directly to corporate clients in Mexico. Almost all of those plants are run with renewable energy sources or natural gas.
The measure also would cancel many long-term energy supply contracts and clean-energy preferential buying programmes, often affecting foreign companies.
It puts private natural gas plants almost last in line — ahead of only government coal-fired plants — for rights to sell electricity into the grid, despite the fact they produce power about 24 percent more cheaply. Government-run plants that burn dirty fuel oil would have preference over private wind and solar plants.
The plan guarantees the government electrical utility a market share of “at least” 54 percent, even though the US-Mexico-Canada free trade pact prohibits favouring local or government businesses.