Cooperation in renewable energy is a positive step in U.S.-Mexico relations, but more can be done to maximize that cooperation, speakers said at the launch of the Woodrow Wilson Center report, "Environment, Development and Growth: U.S.-Mexico Cooperation in Renewable Energies." Cooperation can be advanced by better harnessing Mexico's renewable resources and by leveraging the economic complementarities that exist among the border states, speakers said.

Mexico's Green Energy Potential

Mexico has large and untapped geothermal, wind, and solar deposits, said Duncan Wood, chair, Department of International Relations, Instituto Tecnologico Autonomo de Mexico (ITAM), and author of the Wilson Center report. The country is the world's third-largest producer of geothermal energy and has large geothermal deposits in Baja California near big U.S. markets, such as San Diego and Los Angeles. Mexico also offers high promise in wind power, with estimated potential output of 1,800 to 2,400 megawatts for Baja California and 5,000 megawatts for southern Oaxaca state. Though Oaxaca is far from the U.S. border, it will soon be able to export electricity to U.S. markets as Baja California now can, given that Mexico's mainland and peninsular electrical grids are expected to be linked in the very near future. (Right now the Baja California peninsula is connected only to the U.S. grid.) Mexico is rich in solar energy, and large marketable deposits exist particularly in northeastern Baja California, near the U.S. border. In biomass, little investment has been made so far, he said.

Wood cited recent developments that have encouraged renewable energy investment in Mexico. Mexico's oil fields are in long-term and, in some cases, precipitous decline, and the country is plotting a "future as a green nation," shifting the policy focus toward alternative energy development. Additionally, a U.S.-Mexico taskforce on renewables was recently formed—its announcement timed with President Felipe Calderon's May 2010 state visit to Washington—and there has been high-level engagement on the issue by both administrations. Mexico also will host the next U.N. Climate Change Conference, to be held in Cancún in fall 2010. Further encouraging investment in renewables, there are not the blanket prohibitions on private ventures that exist in the hydrocarbons sector, and regulatory adjustments over the past few administrations have enabled a more robust private stake in electricity generation and transmission. Collaboration between Mexico and U.S. government agencies, such as the Department of Energy and the U.S. Agency for International Development, through the framework of the Mexico Renewable Energy Program, have enabled the richer development of Mexico's renewable resources while at the same time promoting the electrification and greater general economic development of parts of rural Mexico, Wood said. Impulses to develop Mexico's renewables sector further align with regional efforts to make North America energy interdependent.

Discussant Joe Dukert pointed out that U.S.-Mexico cooperation on renewables is a little-acknowledged area of binational cooperation, and he stressed the economic complementarities that exist between the two countries on the issue. For example, he noted that Mexico was well-positioned to help furnish the power from renewable sources that must account for up to a third of all electricity used in California by 2020, as dictated by the state's renewable power standard (RPS). "Mexico can help them reach these (renewable energy) targets," he said. Yet at the same time, Dukert said that Mexico needs to do more to enhance its profile as a renewable-energy supplier, and specifically suggested that energy attaches be assigned to the embassy and consulates. Read all of Joe Dukert's comments

Discussant Johanna Mendelson Forman stressed the linkages connecting climate change, energy, and economic development. It is a problem for the United States, too, that Mexico not have adequate energy stocks, she said, adding that "energy poverty is a real issue in Mexico." The CSIS senior associate remarked that energy and climate, which are perceived as less polemical than other issues, are good entry points for a broader U.S.-Mexico dialogue. And she said financing needs for the development of renewables businesses are felt on both sides of the border and not just in Mexico, as U.S. companies suffer from a lack of adequate export-import financing.

Drafted by Robert Donnelly, Program Associate, Mexico Institute
Andrew Selee, Director, Mexico Institute. Ph: (202) 691-4088