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