IMCO Highlights Certainty as Key goal of Leaders’ Summit
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IMCO Highlights Certainty as Key goal of Leaders’ Summit

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Wed, 01/11/2023 - 09:02

In light of the ongoing North American Leaders’ Summit, the Center for Research in Public Policy (IMCO) emphasized the key points to capitalize on the meeting and further achieve cooperation as well as integration in North America. IMCO’s analysis underlines the importance of certainty to further develop the energy industry and carry on with the energy transition. “Mexico, the US and Canada must credibly commit to the obligations assumed in the USMCA to seek the legal certainty necessary to attract investment,” said IMCO.

The institute’s analysis refers to the pressure that Mexico’s protectionist policies placed on industries, hampering the efficiency of foreign investment. An example is the dispute over energy policy that put private international players in disadvantaged positions. The consultations requested due to alleged violations of the USMCA are a major factor generating uncertainty, as any results are elusive and a USMCA panel that may lead to economic sanctions for Mexico could still be requested.

Mexico’s strained clean energy development following López Obrador’s CFE-centered policy direction is a major point of contention. Some of the government’s plans would be open to private investment, which might appease the North American trade partners. Nevertheless, these projects are still underdeveloped. “[The Sonora Plan] aims to attract US$48 billion in investment in solar photovoltaic and wind energy between 2023 and 2030. However, the details are not known, nor is the critical path for its implementation. The commitment is hardly credible considering the efforts of the Mexican government to close the electricity market to private investment,” reads the report.

According to IMCO, Mexico’s climate and geographic diversity provide a good basis to accelerate the energy transition, but for this to happen large investments for the development of low carbon footprint electricity generation and natural gas infrastructure are paramount. In return, competitive gas prices can be decisive to attract foreign investment. IMCO recognizes recent efforts to strengthen gas pipeline infrastructure such as the Southeast Gateway, a project that could be a boon to the mission to remedy energy security problems. “The development of gas pipelines in North America has faced increasing obstacles due to environmental and social issues. Despite this, there are currently projects underway to bring natural gas to regions where it is scarce or inaccessible today.”

In an interview with Reuters, Canada’s Prime Minister Justin Trudeau stated that he and US resident Joe Biden would be clear with Mexico’s president López Obrador regarding their stance that settling the USMCA dispute would be beneficial to Mexico’s development.

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