U.S.-Mexico Climate Priorities for the Biden Administration

President-elect Biden could—and should—open the door for renewed North American collaboration and leadership on climate change and clean energy, which has all but disappeared during the past four years. For that to happen, his administration will need to successfully encourage President Andrés Manuel López Obrador to support policies that will enable Mexico to live up to its potential as a renewable energy powerhouse. Mexico has historically been considered a global leader on climate change policy. It was one of the first countries in the world–and the first developing country—to pass a climate change law in 2012, and also one of the first countries to present a Nationally Determined Contribution under the Paris Agreement. The climate change law was later updated in 2018 to align domestic policy with Mexico´s international commitments. Unfortunately, in an effort to bolster Mexico’s public sector power and electricity companies, President López Obrador (commonly referred to as AMLO) has pushed forward a number of pro-fossil fuel policies that are unraveling much of the country’s previous progress. The Biden administration will face major challenges getting AMLO to reverse course, but it a critical task as the United States itself re-enters the international climate policy arena. While Mexico’s greenhouse gas emissions are lower than the United States and Canada it is still the twelfth largest emitter worldwide. The close market integration with its northern neighbors also means its efforts to address climate change have an outsized impact.

Lamatalaventosa Wind Farm in Oaxaca, Mexico

Walmart from Bentonville, USA, CC BY 2.0, via Wikimedia Commons

Since AMLO took office in December 2018, his government has attempted to consolidate the position of Mexico’s national oil company, PEMEX, and national electric utility, CFE. Several of the actions the government has taken negatively affect renewable energy projects which are largely privately owned. These actions include the cancellation of the 4th long-term electricity auction, modification of clean energy certificate rules, changes to grid interconnection policies and increases to transmission tariffs that adversely impact renewable energy projects. The government also cut budgets for renewables, reallocated those funds to refurbish older coal-fired power plants, and plans new fossil fuel plants and a refinery. While some of the actions pushed by the government are held up by legal injunctions, the resulting uncertainty may already be deterring future investments in renewable energy. In addition to creating climate transition risks for Mexico’s public finances, doubling down on a fossil fuel-focused energy strategy will make it extremely difficult for the country to meet its national clean energy and emission reduction goals.

By contributing to a warming climate over the long run, misguided actions such as these are at odds with the sustainable development and social justice gains to which the AMLO government aspires. Mexico’s own vulnerability to global warming’s impacts are grave and the risks overwhelmingly affect the most vulnerable and marginalized communities. The government projects that increased floods alone could cost the country $7 billion, and the changing climate could cost more than $1 billion from 2020-2029 in Mexico City, Guadalajara and Monterrey combined. It is also unfortunate because Mexico could move much farther towards “energy sovereignty”—one of AMLO’s stated goals—by focusing on building up its domestic renewable energy and energy efficiency sectors and ensuring that these resources benefit marginalized communities.

It will likely be challenging for President-elect Biden to establish a positive and productive relationship with Mexico. Despite President Trump’s repeated insults against Mexico, AMLO has gotten along with him rather well. Experts point to their similarities in personality and governing style. Significantly, AMLO was one of the last world leaders to recognize Biden’s election victory, and he is not interested in foreign involvement in Mexico’s affairs. Yet, President-elect Biden’s climate agenda includes increased collaboration throughout Latin America on climate and clean energy initiatives, and Mexico will be a critical part of that work.

Fortunately, the close ties between Mexico and the United States mean that there are many ways that the Biden administration could engage with the country and encourage a reversal of Mexico’s backsliding on climate and clean energy commitments, to the benefit of both countries. Mexico was the United States’ top trading partner for the first three quarters of 2020 with US$ 386 billion flowing between the two countries, and its top goods trading partner in 2019. U.S. and Mexican markets, transportation systems, energy sectors, ecosystems, natural resources, and people are intricately linked. These connections present real opportunities. The next administration should engage early and robustly with AMLO’s administration and other levels of the government on energy and climate collaborations to:

  1. Prioritize mutually beneficial climate change action in bi- and trilateral initiatives. To start, efforts should be mobilized bilaterally or in the framework of trilateral initiatives, such as the North American Leaders Summit, which all but disappeared under the Trump administration. These initiatives should all have climate change as a fundamental focus area, stressing the benefits of renewable energy and how those technologies are the best way to achieve energy sovereignty and create jobs in the 21st century. Once launched, these types of bilateral and trilateral programs require engagement across various agencies and levels of government that can create forums for dialogue and build technical capacity on clean energy solutions.
  2. Incorporate climate change into the USMCA. Trump and AMLO (with Canadian Prime Minister Trudeau) were proud to renegotiate the North American Free Trade Agreement and sign its replacement, the United States-Mexico-Canada Agreement (USMCA). Despite some environmental gains, the USMCA has a major failing: it neglects to even mention climate change. Biden could encourage Mexico to meet its climate commitments by, at the very least, adding the Paris Agreement to the list of multilateral environmental agreements that each USMCA country commits to. To be more thorough, the U.S. could request that climate change be incorporated in other areas of the agreement. These two would require reopening negotiations with Mexico and Canada. That may be a daunting effort, but it would be a worthwhile one, especially if the USMCA is to serve as the new template for future U.S. trade agreements. The new administration could also be supportive of companies using the USMCA to address the fact that U.S. renewable investments are being threatened by the Mexican government’s actions.
  3. Align key environmental efforts and implementation. President-elect Biden’s administration should also prioritize working with Mexican counterparts to harmonize key environmental regulations and implementation efforts with those of the United States. These include standards for air quality, water quality, and fuel quality, which not only contribute to global warming, but also worsen public health and local environments at the expense of communities. For example, Mexico’s regulations for transportation fuel quality—and their implementation—lag significantly behind those of the United States. Biden has made it clear that he intends to undo Trump’s rollbacks on these same U.S. standards, and so working with Mexico to support clean air and water across North America is a natural next step. Environmental authorities could work together to harmonize standards and share enforcement experiences.

As one of Latin America’s top two emitters and a historically progressive voice on international climate issues, Mexico has previously been a key player in the fight against global climate change. Now more than ever –as the climate crisis grows ever more urgent—we need ambition and collaboration from our leaders. President-elect Biden is well-placed to help Mexico once again be a regional leader while together creating benefits for Mexican and U.S. citizens.

About the Authors

Carolina Herrera

Manager, Green Finance & Climate Change, Latin America Project

Amanda Maxwell

Interim Managing Director, International Program

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