The integration of the US and Mexican economies was crafted at a time when energy was a politically untouchable theme of cooperation. Clean energy was still a commercial aspiration. That world has changed, and the nature of the US-Mexico economic and energy relationship needs to change with it to sustain industrial competitiveness, create jobs, and deliver affordable goods and services to US and Mexican citizens.
As argued in the report, the imbalance between net-zero commitments and the lack of action plans by most countries to get there will lead to a period of intense legislation and regulation to correct the course. How Mexico and the United States collaborate on energy and climate policies and regulations in the next five years could shape their economic potential for decades.
The energy transition before Mexico and the United States, and for that matter, the rest of the world, will have profound challenges. Ignoring these challenges will undermine economic competitiveness and most profoundly disadvantage the poor who have little resilience for economic dislocation. Seizing those challenges together, between Mexico and the United States, will create opportunities for both countries. Here are some of the most profound:
- Jobs: The regulatory push toward an electric vehicle world is upon us. Mexico and the US together need to restructure their supply chains and set the incentives now for investments to prepare for the future. Millions of jobs will depend on it. Renewable power should be part of that equation.
- Justice and Equity: Renewable energies can help solve some of the logistical conundrums of fuel and infrastructure to bring electricity to Mexican communities without access. Consistent, sustainable power can spark entrepreneurship. It would revolutionize health care and access to medical care. It would expand educational prospects through lighting and the internet.
Carbon Markets and the Poor: Manufacturers, energy producers, and financial institutions all need to reduce emissions. Mexico has the forests and agricultural lands that can absorb carbon or reduce emissions from deforestation. Carbon markets can link the two, with sales of the offsets addressing social welfare for the poor. Even though much needs to be done to close gaps on monitoring and verification, the foundational connections exist.
- Technology and Hydrocarbons: Mexico and the United States are major producers of hydrocarbons. They have a common stake in developing and sharing commercially viable technologies that would capture carbon, reduce emissions, and extend the lifespan of their oil and gas resources. This change alone would ease major dislocations of an energy transition.
Energy Efficiency and Consumers: Buildings account for 39 percent of global emissions, with weather and power inefficiencies wasting fuel and increasing costs to households. Among the most exposed are the urban poor. Both Mexico and the US can target scalable efficiency programs, led by cities, focused on household efficiency solutions for the urban poor.
Unlocking Investment: The world cannot function without power and energy. The infrastructure and energy base in both countries needs to be expanded and renewed, from grids to transmissions lines to retiring obsolete generation plants. This is the moment for compatible policies and regulations that unleash private investment seeking predictable returns and zero-emission assets.
The incoming Biden administration and the López Obrador administration perhaps bring different perspectives on energy, but they share common objectives to create jobs and seek social justice for their citizens. Collaboration on a sustainable energy future can open surprising opportunities that will leave both countries stronger and more resilient — with the chance of fulfilling a promise to preserve our planet for future generations.