MEXICO CITY, Jan 20 (Reuters) - The Mexican president's bid
to tighten state control of power generation drew scrutiny on
Thursday during the visit of a top U.S. energy official, who
faces pressure from her party to move Mexico towards a greener
Energy Secretary Jennifer Granholm, a Democrat, met
President Andres Manuel Lopez Obrador and other officials in
Mexico City for talks that tackled a Mexican plan that U.S.
business leaders worry is curbing investment in renewables.
Granholm outlined an "enormous opportunity for renewable
energy in North America," Foreign Minister Marcelo Ebrard said
on Twitter after the meeting.
Sitting down with Ebrard, Granholm said: "Mexico has such an
enviable, an amazing series of clean resources that we want to
talk about. And, like all friends, there may be issues we're
also going to work on, on electricity reform."
Lopez Obrador, who said talks with Granholm had been
"cordial" and marked by "respect, understanding and a desire for
cooperation on development," had earlier said he planned to set
out the reasons why he was pursuing the market shake-up.
The leftist leader calls his initiative to change the
constitution to favor the state power utility a matter of
national security, saying past governments skewed the market in
favor of private capital.
Not only did this weaken Mexico's cash-strapped state-owned
energy firms, it also hurt consumers and public finances,
according to Lopez Obrador, who says he is committed to lowering
the country's carbon footprint with more hydroelectric power.
However, critics say his plan to give market control to the
utility, the Comision Federal de Electricidad (CFE), is hurting
investment in wind and solar power, will increase costs, and
make Mexico too reliant on fossil fuels, as the CFE uses
hydrocarbons to generate much of its power.
It has also caused diplomatic ructions.
In a letter ahead of Granholm's visit, four Democratic
senators urged her and U.S. Secretary of State Antony Blinken to
"more forcefully express concerns" https://www.foreign.senate.gov/imo/media/doc/01-18-22%20RM%20Letter%20to%20Sec.%20Blinken%20and%20Sec.%20Granholm%20re%20AMLO%20&%20Mexico%20Clean%20Energy%20Commitments.pdf
about Lopez Obrador's energy agenda, calling it antithetical to
"It would also threaten at least $44 billion in private
investment in Mexico's energy sector, (and) negatively impact
U.S. private sector investment in Mexico," wrote senators Bob
Menendez, Brian Schatz, Tim Kaine, and Jeff Merkley.
Lopez Obrador's power bill is in Congress and is expected to
be voted on by the end of April.
Recently, the European Union ambassador to Mexico said https://www.reuters.com/markets/commodities/mexican-electricity-overhaul-is-hurting-investment-eu-says-2021-12-02the
initiative was crimping investment as it could hinder
companies' commitments to boost renewable energy use.
U.S. carmaker General Motors, a major investor in
Mexico, has warned https://www.reuters.com/business/energy/gm-flags-concern-over-renewable-energy-mexico-sees-investment-risk-2021-11-20
that, without a solid basis for renewable energy generation,
Mexico's auto industry could suffer.
The flagship of Mexican manufacturing has struggled under
Lopez Obrador, with automotive output falling for a fourth year
running in 2021. Gross fixed investment levels are about 16%
lower than when he won election in July 2018.
Federico Peña, a former U.S. energy secretary, said that
rather than insisting on a policy that undermined the confidence
of U.S. investors, Mexico should be regarding the transition to
renewable energies as a "win-win" for both economies.
"Look at the resources that Mexico has: sun, wind, open
space, workers," he said. "They have experience in building
highly sophisticated manufactures. They've got great potential."
(Reporting by Dave Graham
Editing by Daniel Flynn, Rosalba O'Brien and Bernadette Baum)