The Mexican president's bid to tighten state control over power generation was in focus on Thursday as a top U.S. energy official visits, under pressure from her party to move Mexico toward policies more conducive to use of renewable energies.
U.S. Energy Secretary Jennifer Granholm, a Democrat, is due to meet President Andres Manuel Lopez Obrador in Mexico City at 6 p.m. local time (0000 GMT), after holding talks with members of his cabinet, including Foreign Minister Marcelo Ebrard.
Ebrard said on Twitter that Granholm had shared her vision for the "enormous opportunity for renewable energy in North America."
"Mexico has such an enviable, an amazing series of clean resources that we want to talk about," Granholm said in a video message shared by the Mexican government, noting that the two sides were also primed to address Mexico's electricity plan.
U.S. business leaders have voiced concerns that Lopez Obrador's plans to overhaul the energy sector are curbing investment in renewables.
Mexico's leftist president said on Thursday he would set out why he is pursuing the power market shake-up, and thank the U.S. government for being respectful towards his energy policy.
Lopez Obrador says his initiative to change the constitution to favor state power utility the Comision Federal de Electricidad (CFE) is a matter of national security, arguing 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 plans to give the CFE control of the market are hurting investment in wind and solar power, will increase costs, and make Mexico too reliant on fossil fuels due to the hydrocarbons the CFE uses to generate much of its power.
It has also caused diplomatic ructions.
Ahead of Granholm's visit, four Democratic senators in a letter urged her and U.S. Secretary of State Antony Blinken to "more forcefully express concerns" about Lopez Obrador's energy agenda, arguing it was "antithetical" to U.S.-Mexico relations.
"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," senators Bob Menendez, Brian Schatz, Tim Kaine, and Jeff Merkley wrote.
Lopez Obrador's power bill is in Congress and is expected to be voted on by the end of April.
The European Union ambassador to Mexico said recently the initiative is crimping investment because it could hinder companies' commitments to increase use of renewable energy.
U.S. carmaker General Motors, a major investor in Mexico, in November warned 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 some 16% below what they were 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)
