US Climate Envoy Visits Mexico

US Climate Envoy John Kerry arrived in Mexico City this week amid high tensions over Mexico’s electric bill favoring state-owned electricity company (CFE) limiting private companies´ investments in renewable energy.

Kerry’s Mexico visit occurs during the forums that are being held in Congress to debate the electric bill introduced by President Andrés Manuel López Obrador.  

Kerry called for more investments in clean energy and urged Mexican lawmakers to keep the country´s market open and competitive,

Kerry expressed the US government’s intentions to be “as helpful as it can be” to support Mexico to ramp up its use of electric vehicles and renewable energy, in synchrony with global efforts to meet climate goals. "Mexico can play a vital, extraordinary role in our efforts to combat the climate crisis."

John Kerry´s arrival happens days after relevant declarations made by US Ambassador to Mexico Ken Salazar to parliamentary leaders. “Laws always need to be reformed as we have learned from experience.” During his speech, he remembered his participation as a key factor in US renewable energy law negotiations between 2005 and 2007. "President Andrés Manuel López Obrador is right in saying ‘we are going to make changes for the best of the people.’ We have to understand his reasons for the current reform process.”

Salazar’s declaration was followed by multiple criticisms from the US business community, since they consider Salazar´s declarations as a message of support to the president´s reform. Soon after, the ambassador took to his Twitter account to clarify his views. "One of my priorities in Mexico is to see for US investors and companies so that there is a fair and even floor. The US respects Mexico's sovereignty and trusts that Mexico will fulfill its commitments under the USMCA when considering changes to the energy sector."

The US Embassy in Mexico reiterated its concerns about the energy sector on the eve of Kerry’s visit through a public statement. “The government of the United States has repeatedly expressed concern over Mexico’s current proposal for the energy sector. Promoting the use of dirtier, antiquated, and expensive technologies over efficient renewable alternatives would put consumers and the economy in general at a disadvantage.”

López Obrador sought to downplay the frictions before Kerry’s arrival by declaring in a press conference that investment opportunities will remain and that the sole purpose his administration pursuits is the strengthening of CFE. He proposed a scheme where the US government could invest through low-interest loans to promote environmental initiatives. “The point is to reach agreements with the US government on investments, obtaining low-interest loans at interest rates like the ones charged in the US,” President López Obrador said.

Kerry’s visit came two weeks after Jennifer Granholm, US Secretary of Energy, visited Mexico, where she voiced the Biden administration's concern with changes in the power sector regulation and its negative impact on US private investment and climate change. “In each meeting, we expressly conveyed the Biden-Harris Administration’s real concerns with the potential negative impact of Mexico’s proposed energy reforms on the US´s private investments in Mexico. The proposed reform could also hinder US-Mexico joint efforts on clean energy and climate,” Granholm said.

John Kerry’s visit days after Granholm depicts the US government’s pressing concerns with the Mexican energy sector and the possibility that the president´s electric bill could be approved. Critics of the bill have voiced their concerns with increased electricity bills, the use of dirtier energy generation, and the negative impact the new legislation will have on market competition, since the bill guarantees the government electrical utility a market share of at least 54 percent. This violates the USMCA´s free trade agreement regulation, which prohibits favoring local or government businesses.

The electric bill Open Parliament in Congress will conclude in late February, voting is expected to happen in April.