Wall Or No Wall, Here Comes US Energy Integration With Mexico

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The latest release from the Obama Administration’s Quadrennial Energy Review includes a tasty little nugget for those of you following news about the incoming Trump Administration. Check out the chapter on North American Electricity Integration and you’ll see a rundown of the opportunities and challenges involved in energy exchange across the US – Mexico border.

The CleanTechnica takeaway: ExxonMobil is in a good position to make Mexico a great place to create more manufacturing jobs, wall or no wall, and ExxonMobil CEO Rex Tillerson will be in a good position to make that happen if he is confirmed as US Secretary of State.

The Quadrennial Energy Review

Quadrennial reviews are an important part of federal planning. The Defense Quadrennial Review, for example, began featuring climate change in its national security risk assessment back in 2010.

That laid the groundwork for DoD’s 2013 climate change adaptation roadmap and a 2015 risk assessment in 2015.

In 2014, the Obama Administration identified energy as a key federal responsibility and established the Quadrennial Energy Review to carry that mission into the 21st century:

Affordable, clean, and secure energy and energy services are essential for improving U.S. economic productivity, enhancing our quality of life, protecting our environment, and ensuring our Nation’s security. Achieving these goals requires a comprehensive and integrated energy strategy resulting from interagency dialogue and active engagement of external stakeholders.

Quadrennial reports are typically issued every four years but the Energy Department has opted for a more granular approach. The first Quadrennial Energy Review was issued in 2015 with a focus on  infrastructure modernization, and the agency is already out with another followup report.

North American Energy Integration

The latest report is QER 1.2: Transforming the Nation’s Electricity Sector. Like QER 1.1, it includes a chapter on North American energy integration.

That includes Canada as well as the US and Mexico, but since the issues of job creation and Mexico have been a running theme of the Trump campaign, let’s focus on those highlights:

…Mexico’s ongoing electric utility industry reforms could have significant impacts on the future of cross-border integration. The reforms are focused on the overall goal of competitiveness, with the twin objectives of reducing electricity costs and developing more clean energy.

A transition in Mexico from oil to natural gas in electricity generation could have tremendous impacts in the manufacturing sector, reducing electricity prices, boosting manufacturing output, and increasing overall gross domestic product for Mexico.

That’s a big ouch! — depending on your perspective.

From a broad viewpoint, the US already has had a long history of grid integration with Canada that involves mutual benefits, including improved reliability and resiliency in support of economic and national security concerns. Grid reliability between Mexico and the US has similar potential.

The state of Texas has already established a working grid relationship with Mexico, partly in order to offset reliability issues in the state (the reliability problem been traced to the state’s insistence on setting up its own grid outside of the range of federal intervention, but that’s a whole ‘nother can of worms).

ExxonMobil and Mexico?

That brings us to the ExxonMobil connection. Over its long history ExxonMobil has built its reputation in the petroleum sector, but the company has been shifting into natural gas in general, and US shale gas in particular, with an eye on petrochemical production as well as power generation.

In one recent development, ExxonMobil is chipping in to support an existing federally-funded carbon capture demo project at power plant. The initial target was coal, and with ExxonMobil’s assist it has expanded to include natural gas.

The company has already started work on a new gas-sourced petrochemical facility in Baytown, Texas, and it is eyeballing a site near Corpus Christie for another such facility, which will manufacture plastics among other things.

The newest plant will create hundreds of permanent new jobs in the Corpus Christie area. However, it will not provide raw material that could support a significant number of other new manufacturing jobs elsewhere in the US.

Its output, according to a report in the Houston Chronicle, is mainly destined for the export market.

Mexico could be one of the lucky winners, amiright?

Mexico, Renewables And Automation

That brings us to the next hot issue, automation.

Automation has enabled some companies — Whirlpool is a notable example — to bring new manufacturing jobs into the US, just a few years after shuttering US facilities and sending thousands of jobs to Mexico.

The number of new US manufacturing jobs coming back is relatively small, though, because those jobs are going to high efficiency, newly automated factories.

Carrier is another example. The company is still sending jobs to Mexico, and is only keeping several hundred jobs going at a facility in Indiana until a taxpayer-funded bailout enables it to finance an automation upgrade at the facility.

Then there’s Ford, which recently cancelled plans for a new manufacturing facility in Mexico. The company does have plans to add hundreds of new jobs at its Flat Rock plant, but the focus of that endeavor is a soup-to-nuts Innovation Center that will accelerate Ford’s initiatives for 3-D printing and automation.

You can blame (or thank) the Obama Administration for fostering the automation trend, partly through Energy Department grants and partnerships.

That support has enabled the US manufacturing sector to keep up with the rest of the world as the global manufacturing industry undergoes yet another one of its massive, disruptive, technology-driven transformations.

Over the long run, though, access to low cost renewable energy — and a steady stream of plastics and other products that fit the bill for advanced manufacturing and 3-D printing — will enable countries like Mexico to jump on the automation bandwagon, too.

Game on!

Photo (cropped): via NREL.

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Tina Casey

Tina specializes in advanced energy technology, military sustainability, emerging materials, biofuels, ESG and related policy and political matters. Views expressed are her own. Follow her on LinkedIn, Threads, or Bluesky.

Tina Casey has 3142 posts and counting. See all posts by Tina Casey