ENERGY WORKING GROUP
ACTIVITIES OF THE ENERGY WORKING GROUP

November 12, 2003

During the eighth meeting of the Energy Working Group (EWG) under the US-Mexico Binational Commission, both delegations analyzed recent developments and reaffirmed their commitment to cooperate towards strengthening bilateral energy trade and promote scientific and technological cooperation in the sector. The EWG reviewed the status of each of the high-priority issues in the bilateral energy relationship between the Department of Energy (DOE) and the Secretariat of Energy (SENER).

In the area of Strategic Infrastructure Protection, in January and October, 2003, bilateral meetings were held to review the progress achieved by various Working Groups, including Energy, in the implementation of the Trans-border Strategic Infrastructure Protection plan of the Border Partnership Action Plan (item # 3).

Mexico also participated in the Carbon Sequestration Leadership Forum led by the United States, held in June 2003, in Tysons Corner, Virginia. This US initiative was supported by the following countries: Australia, Brazil, Canada, China, Colombia, European Commission, India, Italy, Japan, Norway, Russia, United Kingdom and Mexico, whose Energy Ministers signed the Charter of the Forum.

In another area, both countries reaffirmed their commitment to convene three workshops on cross border energy issues. The first was hosted by DOE in November, 2002, in San Antonio Texas. Mexico intends to host the second workshop in Saltillo, Mexico, and the US will host the third one in southern California in 2004.

In the area of science and technology (S&T), DOE and SENER continued their cooperative activities under the Agreement for Energy Cooperation and its four Annexes, which include cooperation in the fields of: Renewable Energy; Energy Efficiency; Hydrocarbons; and Clean Fossil Energy Technology. Most new activities were initiated under the North American Energy Working Group's S&T Experts Group.

In the natural gas area, Mexico participated in several meetings organized by the US National Petroleum Council (NPC), which conducted a comprehensive study on the natural gas market over the coming 25 years. This study, which was recently released, concludes that Mexico's role as gas supplier to the US is marginal because it is forecast that Mexico will remain a net importer in the short term.

In addition to the regular bilateral work of the EWG, the U.S. and Mexico are engaged in joint activities that reflect their respective commitments at the 2002 World Summit on Sustainable Development (WSSD). In particular, the US and Mexico are implementing activities in furtherance of the U.S. Government's Clean Energy Initiative entitled, "Powering Sustainable Development from Village to Metropolis," which was launched at the WSSD. These include joint projects to: i) improve rural access to energy services; ii) develop a financial tool for multiple energy efficiency projects in the border region; iii) implement a pilot project to retrofit diesel buses in Mexico City, and iv) conduct an analysis of potential refinery retrofits. These projects are being undertaken by the U.S.Agency for International Development (USAID), DOE, the Environmental Protection Agency (EPA), and their counterparts at SENER and the Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT).

In the trilateral area, the North American Energy Working Group (NAEWG) held its fourth meeting in Washington, D.C. in December, 2002, and its fifth meeting in Ottawa, Canada in July, 2003.

The Group has continued its tasks under the five Experts Groups: Energy Picture; Electricity Regulatory Issues; Energy Efficiency; Science and Technology; and Natural Gas Trade and Interconnections, and the ad hoc Critical Infrastructure Protection Forum. Under these Groups, SENER, DOE and Natural Resources Canada (NRCan) have carried out important cooperation activities, including the following deliverables:

• The preparation and release on the internet, at the end of 2002, of two more documents, one on electricity regulation and one on energy efficiency standards, to add to "North America-The Energy Picture," which was released in June 2002.

In addition, NAEWG has continued discussions on energy policy and has promoted technical and scientific exchanges. The Group is preparing a new version of the North America Energy Picture, which is expected to be released late in 2004. Also, the Group is developing a joint methodology for demand forecasting and will continue to work on supply issues in the future, using the SAGE Model. In December, 2002, the Experts Group on Electricity Regulatory Issues initiated a monthly clearinghouse report among the Energy Departments and regulatory bodies of each country. The NAEWG Science and Technology Experts Group has finalized a trilateral Agreement Mechanism. The Natural Gas Trade and Interconnections Experts Group has agreed to finalize a Natural Gas Vision Report. by the beginning of 2004.

During the fifth meeting of the NAEWG held on July 16, in Ottawa, the principals from Mexico, USA, and Canada, took note of the achievements completed by the Experts Groups, and reviewed a draft report to be submitted shortly to the Secretaries and Minister of each country, The NAEWG also agreed to develop a mechanism to engage with business and other potential stakeholders.

FUTURE ACTIONS

During 2004, SENER and DOE will continue fostering their cooperative activities in the area of energy trade and cross border energy issues. They agreed to convene the second and third workshops on cross border electricity and natural gas interconnections and trade. DOE and SENER will also conduct activities related to critical infrastructure protection, and continue to implement their shared vision for bilateral and trilateral S&T cooperation. The trilateral North American Energy Working Group will continue developing and improving the ongoing efforts within the five Experts Groups and the Ad Hoc Critical Infrastructure Forum, to foster the development of a North American Energy market, to promote enhanced energy security, and to stimulate economic growth. A NAEWG Ministerial meeting will be held shortly, and the trilateral Science and Technology Agreement Mechanism will be signed.

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