Missing Obama in the times of our Climate Commitments.
President Obama closing campaign calls in the United States midterm election makes me reminiscent of how he is also missed in international affairs. One such initiative his administration strongly promoted was the Energy and Climate Partnership of the Americas (ECPA). The initiative brought together leaders of energy, environment and economy ministries to combat climate change and passed the Paris Climate Commitments in 2015. Merging the policies meant changing the bilateral relationships between the US and Mexico into a new dynamic one to meet the global challenge. (This is similar to what President Trump did with migration and trade, which radically changed migration protocols forever.)
We need this type of thinking to meet the COP 27 goals in the Americas, and in particular Mexico’s efforts. UC-SD Mexico Center research suggests that Mexico needs US$143 billion to pay for its climate commitments.[1] Reporting that “Mexico would need to invest around US$7.4 billion /year to implement the needed actions to achieve its unconditional NDCs. This represents approximately 2.4% of Mexico’s 2021 national budget.”
While Mexican president Andres Manuel Lopez Obrador, known as AMLO, has prioritized—the Tren Maya, the refinery in his home state of Tabasco and slashing his public sector bureaucracy. He has not necessarily disagreed not to protect the environment, but he has only taken limited action to improve it. That is until this week, with new promise to meet GHG standards and set nationally determined contributions (NDCs) for #COP27 in Sharm El-Sheikh.
In the Americas we see a divergent view of ECPA today by various governments in Latin America. In Mexico, for example after a bureaucracy’s shake down, whereby AMLO’s campaign manager and economy minister Tatiana Clouthier, quit after seeing unresolved follow up of her proposed trade negotiations to meet the US and Canada half way in the consultation to violations made by Mexico to the newly signed USMCA. But the President seems to be digging his heels into the sand that changes in the electoral grid are not required.
Last week’s meeting between U.S. Trade Representative Katherine Tai and Mexico’s new top trade official, Minister Raquel Buenrostro, former head of the Tax Agency and budgeting office of the Ministry of Finance, sought to change the electricity providers, but the results stayed the same. While the administrative shuffle was expected, many analysts have projected that AMLO would use his nativist Nationalism desire to maintain Mexico as a petrol renterist state. This makes the country dependent on oil and its production instead of eliminating its use for a greener self-sustainability economic future. This action could also prevent tax reforms or expansion of his trade regimen.
This is a double warning for those concerned with fiscal commitments. Transforming the petrol state would ultimately threaten presidential powers to manipulate the budget to his or her liking. The Mexican presidential system often uses the budget to increase social funding or pay for votes. These efforts, are much more likely to be led by his handpicked successor Claudia Sheinbaum, the mayor of Mexico City and a former professor in energy engineering. Thus, avoiding AMLO to discuss tax or governance reforms leaving much of the dissatisfaction with pro-business elites to form their political opposition for the presidential election in 2024. The disapproval of his current Minister of Finance, rumors suggest is also seeking resignation, also confirms these assumptions.
Ironically, in June, the AMLO Government told the Major Economies Forum on Energy & Climate chaired by President Biden that his government would present new climate goals (NDCs) ahead of #COP27 in Sharm El-Sheikh. Although the 2016 goals still haven’t been met and the country moving forward has to develop much more its financial mechanisms before it can promise more commitments.
What’s most worrisome is that Mexico is raises its commitment when it hasn’t yet met the previous ones. According to the same report “Mexico’s 2016 NDCs, the total cost of implementation of the unconditional pledges would be US$126 billion, 11 spent over the course of a 17-year implementation period (2014-2030).”
International Finance Institutions (IFIs) aren't the solution. Mexico must leverage its own financing from capital markets to reduce greenhouse gas (GHG) and invest into alternative sources by stretching their own public finances. ESG financing could be a way forward, yet, many in the capital markets don’t understand who hold the risk in the projects.
Perhaps it’s time to link energy and climate together again and think holistically about how to combat climate change. Limiting global warming to well below 2, preferably to 1.5 degrees Celsius, is the global commitment. The question than is can we deliver this based on leaders promises?
Disclosure: I worked at the State department (2009-12) to launch the urban sustainability program under ECPA and now research financial mechanisms to fight climate change.
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