US warns Mexico of violations to USMCA in energy

Market: Crude oil, Oil products
15/01/21

Mexico's recent energy policies favoring state-owned companies could violate the US-Mexico-Canada free trade agreement (USMCA), the US secretaries of state, energy and commerce told Mexico in the waning days of their administration under President Donald Trump.

"We have been concerned by reports of a July 22 memo, followed by a September 22 meeting with regulators who were allegedly instructed to block permits for private-sector energy projects and to exercise their regulatory authority to favor state-owned energy companies," the officials said in a letter to their counterparts dated 11 January. "If true, this would be deeply troubling and raise concerns regarding Mexico's commitments under the USMCA."

US president-elect Joe Biden takes office on 20 January, and some industry groups believe the new leader could help ease international trade disputes.

The letter is the third in a series of high-level complaints from US officials or industries about the issue, after a bipartisan letter from US lawmakers to the White House in October and a letter from the American Petroleum Institute in June.

"Mexico's government is implementing an adequate energy balance within Mexico's territory," energy minister Rocio Nahle said today in response to the letter. "The relation with the US within the USMCA in energy issues is one of respect to the constitutional norms of each country. That is how it was specified in the treaty."

Mexican president Andres Manuel Lopez Obrador, a long-term critic of the 2014 energy reform that dismantled state-owned CFE and Pemex's monopolies, has shut down new avenues for private sector investment in the upstream sector, launched a series of regulatory amendments that seek to strengthen Pemex and CFE's market position and forced renegotiations of previously signed contracts.

In September, Lopez Obrador asked regulators to promote the interests of CFE and Pemex where possible, despite the existing legal framework that calls for an even playing field for all participants.

In October Lopez Obrador defended his decision to ask for support of regulators for the state-owned companies, and said that "in energy policy, we have not subscribed any agreements with the US or Canada."

But the US secretaries also warned that Mexico's actions could hurt not only several private-sector energy projects but also "hundreds of millions of dollars of US government public energy investments in Mexico."

These resources are invested in Mexico through the US International Development Finance Corporation, the Export-Import Bank of the United States, and the North American Development Bank.

The secretaries reiterated their respect for Mexico's sovereign right to decide its energy policy in the letter, but emphasized hat the country must live up to the commitments of the USMCA. Doing so would help meet Mexico's energy policy goals of accessible energy prices and energy self-sufficiency, the letter said.

By Sergio Meana

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22/11/24

Cop 29 goes into overtime on finance deadlock

Developing countries' discontent over the climate finance offer is meeting a muted response, writes Caroline Varin Baku, 22 November (Argus) — As the UN Cop 29 climate conference went into overtime, early reactions of consternation towards a new climate finance draft quickly gave way to studious silence, and some new numbers floated by developing nations. Parties are negotiating a new collective quantified goal — or climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The updated draft of the new finance goal text — the centrepiece of this Cop — proposes a figure of $250bn/yr by 2035, "from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". This is the developed country parties' submission, the Cop 29 presidency acknowledged. Developing nations have been waiting for this number for months, and calling on developed economies to come up with one throughout this summit. They rejected the offer instantly. "The [$250bn/yr] offered by developed countries is a spit in the face of vulnerable nations like mine," Panama's lead climate negotiator, Juan Carlos Monterrey Gomez, said. Negotiating group the Alliance of Small Island States called it "a cap that will severely stagnate climate action efforts". The African Group of Negotiators and Colombia called it "unacceptable". This is far off the mark for developing economies, which earlier this week floated numbers of $440bn-600bn/yr for a public finance layer. They also called for $1.3 trillion/yr in total climate finance from developed countries, a sum which the new text instead calls for "all actors" to work toward. China reiterated on 21 November that "the voluntary support" of the global south was not to be counted towards the goal. A UN-mandated expert group indicated that the figure put forward by developed countries "is too low" and not consistent with the Paris Agreement goals. The new finance goal for developing countries, based on components that it covers, should commit developed countries to provide at least $300bn/yr by 2030 and $390bn/yr by 2035, it said. Brazil indicated that it is now pushing for these targets. The final amount for the new finance goal could potentially be around $300bn-350bn/yr, a Somalian delegate told Argus . A goal of $300bn/yr by 2035 is achievable with projected finance, further reforms and shareholder support at multilateral development banks (MDBs), and some growth in bilateral funding, climate think-tank WRI's finance programme director, Melanie Robinson, said. "Going beyond [$300bn/yr] would even be possible if a high proportion of developing countries' share of MDB finance is included," she added. All eyes turn to the EU Unsurprisingly, developed nations offered more muted responses. "It has been a significant lift over the past decade to meet the prior goal [of $100bn/yr]," a senior US official said, and the new goal will require even more ambition and "extraordinary reach". The US has just achieved its target to provide $11bn/yr in climate finance under the Paris climate agreement by 2024. But US climate funding is likely to dry up once president-elect Donald Trump, a climate sceptic who withdrew the US from the Paris accord during his first term, takes office. Norway simply told Argus that the delegation was "happier" with the text. The EU has stayed silent, with all eyes on the bloc as the US' influence wanes. The EU contributed €28.6bn ($29.8bn) in climate finance from public budgets in 2023. Developed nations expressed frustration towards the lack of progress on mitigation — actions to cut greenhouse gas emissions. Mentions of fossil fuels have been removed from new draft texts, including "transitioning away" from fossil fuels. This could still represent a potential red line for them. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Opinion: Bridging the divide

22/11/24

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22/11/24

Opinion: Bridging the divide

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Cop: Brazil eyes $300bn/yr for climate finance goal

22/11/24

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22/11/24

Cop: Brazil eyes $300bn/yr for climate finance goal

Baku, 22 November (Argus) — Brazil has set out a suggestion of "at least" $300bn/yr in climate finance to be provided by developed countries to developing nations. Brazilian representatives set out their proposal today, in response to a draft text on a new climate finance goal. Brazil's proposal of $300bn/yr in climate finance by 2030 and $390bn/yr by 2035 are in line with the recommendations of a UN-mandated expert group. Negotiations at Cop are continuing late into the evening of the official last day of the conference, with no final texts in sight. Discussions centre around the new collective quantified goal (NCQG) — the climate financing that will be made available to developing countries in the coming years to help them reduce emissions and adapt to the effects of climate change. The presidency draft text released this morning put the figure at $250bn/yr by 2035, with a call for "all actors" to work towards a stretch goal of $1.3tn/yr. Representatives of developing countries have reacted angrily to the figure put forward in the text, saying it is far too low. Brazil's proposal appears to call for all of the $300bn-$390bn to be made up of direct public financing, which could then mobilise further funding to reach the $1.3tn/yr. It was inspired by the findings of a UN report, Brazil said. The UN-backed independent high-level group on climate finance today said that the $250bn/yr figure was "too low," and recommended the higher $300bn-390bn/yr goal. Brazil's ask would be a significant step up in the required public financing. The $250bn/yr target includes direct public financing and mobilised private financing, and potentially includes contributions from both developed and developing countries. Wealthier developing countries have been hesitant to see their climate financing fall in this category, which they say should be made up exclusively of developed country money, in line with the Paris Agreement. But $300bn/yr would represent an increase in ambition, Brazil said, while the $250bn/yr called for in the draft text would be very similar to the $100bn/yr goal set in 2009, after taking into account inflation. Delegates at Cop look set to continue discussions into the night. A plenary session planned for late in the evening, which would have allowed parties to express their positions in public, has been cancelled, suggesting groups still have differences to hammer out. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Drafts point to trade-off on finance, fossil fuels

22/11/24

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22/11/24

Cop: Drafts point to trade-off on finance, fossil fuels

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Singapore light distillate stocks hit seven-week high

22/11/24

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22/11/24

Singapore light distillate stocks hit seven-week high

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