US energy transition path will pressure Mexico: Update

Adds meeting remarks in fourth, fifth paragraphs.

US president Joe Biden's energy transition plans will put pressure on Mexico to keep up with its larger neighbor's policies regardless of President Andres Manuel Lopez Obrador's preferences, a senior US official said.

Biden today hosted Lopez Obrador and Canadian prime minister Justin Trudeau for a North American leaders summit, reviving a format that lay dormant for four years. With Biden's election, the US and Canada are aligned on decarbonization goals, but Mexico under Lopez Obrador has moved in the opposite direction with a set of policies designed to extend fossil fuels' prevalence in the country's energy mix.

"When we think about North America in that regard, it is as partners," the US official said ahead of Biden's meeting with his Mexican counterpart. "And what we want to lay out are kind of the opportunities and the opportunity costs of certain decisions."

The shared vision for North America is one where problems are solved together, particularly ending the Covid-19 pandemic, solving the climate crisis, and taking effective actions for immigrants in the region, Biden said during the combined 20-minute message offered by the continent's three heads of state.

Neither Lopez Obrador nor Trudeau touched on the energy issues that are a of vital importance for the Biden administration in the initial message before the private meeting. Lopez Obrador asked president Biden to stop rejecting migrants and push back against prejudices and myths to grow the labor force of the region.

The US is monitoring Mexico's electricity sector overhaul that would restore state power company CFE's market dominance and shutter the country's energy regulators — actions that critics say are designed to protect Mexico's fossil fuel-powered generation.

"Given where the US economy is going to be going over the course of this administration and the priority that this president has placed on addressing the climate emergency," the US hopes to have Mexico on its side, the official said.

US investors are concerned that "attempts to favor state-owned enterprises at the expense of renewable and other private energy providers only undermine investment certainty" and put shared climate change goals at risk, US business group the Chamber of Commerce said ahead of the presidents' meeting.

Mexico is a major importer of US natural gas — US exports by pipeline averaged 6 Bcf/d in January-August, up by 12pc on the year, Energy Information Administration data show.

By Haik Gugarats