Mexico’s president said he will continue to push for energy sector reform despite concerns raised by US authorities that it could shut down its market, obstruct competition and possibly violate the US-Mexico-Canada trade agreement.

After meeting with Mexican President Andrés Manuel López Obrador, US climate envoy John Kerry expressed “considerable concerns” about Mexico’s plan to favor its state power company and limit private and foreign firms that have invested in renewable energy. in Mexico.

AMLO said that with the proposed changes “the treaty is not affected at all”, despite the fact that the Treaty between Mexico, the United States and Canada (T-MEC) contains clauses that prohibit countries from favoring their own industries over competitors. foreign.

However, the president acknowledged that foreign companies have stated that the change in rules would affect investor confidence in the country.

“What do they say, the rule of law is being violated, they want to expropriate the electricity industry, there are no guarantees for investment in Mexico, we have no confidence,” said López Obrador. “We are not going to fight with the United States government.”

US companies have complained loudly about constitutional reforms proposed by López Obrador in October. The reforms remain stalled in the Mexican Congress, where they need a two-thirds majority to pass that the president has not yet been able to secure.

In a statement, the US embassy said that in the meetings, Kerry mentioned “the important concerns that the Biden-Harris administration has about the current energy reform proposal in Mexico, and the imperative to promote open and competitive economies, in compliance with the T-MEC”.

The changes would guarantee a majority share of the market for state power plants that typically burn fossil fuels while limiting private wind, solar and natural gas companies to a smaller share of the market.

Many US companies in Mexico have invested in cleaner energy sources or rely on cheaper energy produced by them.

But López Obrador’s affinity for fossil fuels is an ongoing issue. The Mexican president often speaks with nostalgia of his childhood in the oil state of Tabasco and has promoted investments in refineries. Those refineries often produce dirty oil as surplus, which has to be incinerated in government plants because there are so few buyers already.

The initiative presented in October would cancel the contracts under which 34 private plants sell power to the national grid. The plan would also declare as “illegal” another 239 private plants that sell energy directly to corporate customers in Mexico. Almost all of these plants operate with renewable sources of energy or with natural gas.

Also, the measure would cancel many long-term energy supply contracts and preferential acquisition programs for clean energy, which would mainly affect foreign companies.

The plan puts private natural gas-fired thermoelectric plants near the back of the queue for the rights to sell electricity to the national grid — ahead only of government coal-fired plants — despite the fact that they cost $24 to produce. % minor. Government plants that consume fuel oil would be given preference over solar and wind plants.

The proposal guarantees the CFE (the Mexican Federal Electricity Commission) a market share of “at least” 54%, despite the fact that the T-MEC prohibits granting preferences to local or government companies.

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