Cablegate: Secretary Kessel and Ambassador Discuss Bilateral Energy

VZCZCXRO4669
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2440 2292204
ZNR UUUUU ZZH
P 172204Z AUG 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 7922
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

UNCLAS MEXICO 002440

SENSITIVE, SIPDIS

STATE FOR WHA/MEX, WHA/EPSC
STATE FOR EEB/ESC, OES/OPA, L/OES
DOE FOR A/S SANDALOW, G.WARD AND A.LOCKWOOD

E.O. 12958: N/A
TAGS: ECON ENRG EINV PGOV SENV MX
SUBJECT: SECRETARY KESSEL AND AMBASSADOR DISCUSS BILATERAL ENERGY
COOPERATON

1. (SBU) Summary: Energy Secretary Georgina Kessel told Ambassador
Pascual August 13 that Mexico is eager to continue working with the
US on carbon capture and storage, energy efficiency, standards, a
bilateral market for renewable energy, and gas flaring. Kessel
emphasized the need for an action plan with concrete projects and
priorities. The Ambassador and Kessel agreed that it would be
useful to have the Bilateral Framework for Clean Energy and Climate
Change working group meet before the end of 2009, recognizing the
schedule will get harder the closer we get to Copenhagen. End
Summary.

2. (SBU) The Ambassador's August 13 courtesy call on Secretary
Kessel allowed for a candid discussion on the broad range of energy
topics between the US and Mexico. Kessel's Chief of Staff Carlos
Petersen, Director General for International Affairs Aldo Flores,
and Econoff also participated in the meeting. Mexico's proposal to
negotiate a bilateral agreement on trans-boundary reservoirs, a
primary focus of the meeting, is discussed septel.

3. (SBU) Secretary Kessel noted that the GOM looks forward to
collaborating with the USG on carbon capture and storage (CCS). At
the North American Leaders Summit, the three countries agreed to
produce a North American Carbon Atlas to create a uniform mapping
methodology and to facilitate data sharing. The GOM has been in
contact with Mario Molina, a Mexican Nobel Prize laureate who
advises both the USG and GOM on climate change, and is considering a
demonstration or pilot project. According to Kessel, the Mexican
focus for CCS is on carbon emissions from heavy fuel oils (also
known as bunker C) for electricity generation. She added that
funding for pilot projects is still an issue. The Ambassador
commented that the US Trade Development Agency, OPIC, or EXIM may be
able to assist with financing for these projects. The Ambassador
added that the United Arab Emirates have some impressive CCS
projects in the Persian Gulf which inject carbon to increase gas
production. Kessel responded that such initiatives could be of
interest to Mexico and asked her team research these options.

4. (SBU) Kessel commented that energy efficiency projects offer the
greatest opportunities to reduce carbon emissions in the short run.
She emphasized that Mexico is particularly interested in continuing
trilateral collaboration on harmonized energy standards - both to
save energy and to increase North American competitiveness. If we
cannot make progress trilaterally, Kessel noted, the US and Mexico
should proceed bilaterally. The Ambassador agreed that standards is
a promising area and asked how we can best advance our objectives.
Kessel asked for assistance in getting the right agencies from
governments involved in the discussion including the Ministry of
Economy in Mexico and EPA in the US.

5. (SBU) Turning to renewable energy, Kessel said Mexico has
significant potential, but that renewable energy generation was
growing more slowly than she would like, due to resistance from the
Commission Federal de Electricidad (CFE - Mexico's state owned
electricity monopoly). The pace will pick up now, Kessel asserted.
Through the energy reform passed last year, CFE will introduce new
electricity tariffs to encourage renewable energy generation.

6. (SBU) Commenting that cross border transmission of renewable
energy offers tremendous opportunities, Kessel highlighted the
Sunrise Powerlink Corridor as an example of what can be achieved.
(Note: Sunrise Powerlink is a renewable energy transmission
corridor that will supply San Diego with solar, geothermal, and wind
energy generated in Baja California. San Diego Gas and Electric
Company is building the transmission corridor to help the city
comply with the Energy Policy Act, the 20 Percent Renewable Energy
Bill by 2010, and the California Global Warming Solutions Act. End
Note) The Ambassador and Kessel agreed that structuring pricing
policies that compare the marginal costs of renewable energy to the
marginal costs of other sources of energy is a key to promoting
renewable energy.

7. (SBU) The Ambassador and Kessel agreed that the Bilateral
Framework on Clean Energy and Climate Change provides a useful
framework for cooperation on renewable energy. Both agreed that it
would be useful to hold a meeting of the bilateral working group to
discuss how to move the framework forward. Kessel added that she
would prefer to keep discussion of trans-boundary reservoirs
separate from the bilateral framework.

PASCUAL

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