MEXICO CITY ā U.S. climate envoy John Kerry will arrive in Mexico Wednesday amid high tensions over Mexicoās plan to favor its state-owned electricity company and limit private and foreign firms that have invested in renewable energy.
Mexican President AndrĆ©s Manuel LĆ³pez Obrador has vowed to forge ahead with changes to Mexicoās power sector, increasing investment in fossil fuels while limiting private wind, natural gas and solar plants to a minority market share.
The U.S. government has expressed āreal concerns with the potential negative impactā on U.S. firms and investments. Kerry may also be troubled by LĆ³pez Obradorās defense of dirty state-owned coal and fuel-oil power plants.
LĆ³pez Obrador sought to downplay the frictions Tuesday, saying āthere are opportunities for investment. The only thing we want to do at the same time is strengthen the CFE,ā Mexicoās state-owned Federal Electricity Commission.
The commission runs plants that burn coal or fuel oil produced by Mexicoās 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 like oil. But he denied Mexico didnāt want clean energy, and suggested the United States might offer funding for his plans to increase Mexicoās hydroelectric power capacity.
āThe thing is to reach agreements with the U.S. government on investments ā¦ getting low-interest loans, at interest rates like they charge in the United States, that would be an investment in favor of the environment,ā LĆ³pez Obrador said.
U.S. Secretary of Energy Jennifer M. Granholm visited Mexico in January and wrote that āIn each meeting, we expressly conveyed the Biden-Harris Administrationās real concerns with the potential negative impact of Mexicoās proposed energy reforms on U.S. private investment in Mexico,ā adding āThe proposed reform could also hinder U.S.-Mexico joint efforts on clean energy and climate.ā
Last year LĆ³pez Obrador proposed a constitutional reform to restrict sales by private power generators and favor Mexicoās 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 āillegalā 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 programs, often affecting foreign companies.
It puts private natural gas plants almost last in line ā ahead of only government coal-fired plants ā for rights to sell electricity into the grid, despite the fact they produce power about 24% 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 āat leastā 54%, even though the U.S.-Mexico-Canada free trade pact prohibits favoring local or government businesses.