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Mexico Energy Bill Could Stop U.S. Climate Plan

The new Mexican energy bill that could become law and give more state control over the energy industry could interfere with U.S. companies' emissions-cutting plans, the American Chamber of Commerce in Mexico said, as quoted by Reuters this week.

"Big U.S. companies have climate commitments as serious as being able to operate with 80% or 100% clean energy in the next decade," said the head of the U.S. business lobby, Ana Lopez. "If they cannot meet their commitments because Mexico is not capable of providing enough clean energy, these companies will not be able to continue operating in the country," she added.

Last year, Bloomberg reported that the new energy bill, which is being pushed by the Mexican president, Andres Manuel Lopez Obrador, as part of efforts to strengthen the state's control over all industries, could shelve $22 billion worth of wind and solar projects. These projects are all operated by big foreign companies, including Spain's Iberdrola and U.S. Sempra Energy.

The energy bill could lead to the cancellation of some of these projects as it prioritizes the development of hydropower, nuclear power, and natural gas power generation: capacity run by state-owned Comision Federal de Electricidad.

The aim of the legislation is simple: the government wants CFE—like Pemex on the oil market—to dominate over private players with the target market share for the state utility seen at 54 percent, compared to its current share of 38 percent.

The American Chamber of Commerce in Mexico is not the first one to complain about Mexico's plans. Energy Secretary Jennifer Granholm has also expressed concern about the proposed legislative changes for Mexico's energy market. Granholm discussed her concerns with Mexico's government earlier this year, who said that the Mexican party was open to negotiations on how to best tackle the issues raised by Washington.

By Charles Kennedy for Oilprice.com

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