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A strategic plan on trade and environment.

According to the environmentalists who know best, Mexico may yet prove to be fruitful ground for the renewable energy sector. The North American Commission for Environmental Cooperation (CEC) held its third "North American Symposium on Assessing the Environmental Effects of Trade" from November 30 to December 1. The symposium focused on the impact of investment and economic growth on the environment, with a lengthy foray into the topic of renewable energy.

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The CEC, created concurrently with NAFTA by the United States, Mexican and Canadian governments and headquartered in Montreal, works with the NAFTA Free Trade Commission to address trade-related environmental concerns, as required by the Environmental Side Agreement Article 10(6). To carry out this mandate, the 10(6) Working Group was created and is composed of trade and environmental officials from the three countries.

Taking place a decade after NAFTA entered into force, the symposium included representatives from the public, private and educational sectors to present papers and discuss the status and future of its objectives and activities. The consortium recently published its "Strategic Plan on Trade and Environment." The proposal consists of one goal: "To promote policies and actions that provide mutual benefits for the environment, trade and the economy."

To achieve this goal, the plan identifies four objectives, ranging from promoting green products and services to improving regional and national coordination of policies. The proposal also states six specific areas of activities: 1) Enhancing markets for renewable energy; 2) Controlling invasive species; 3) Improving enforcement of environmental laws; 4) Developing green purchasing practices; 5) Connecting North American eco-regions and 6) Sharing methodologies for conducting environmental reviews of trade agreements.

ALTERNATIVE ENERGY

Renewable energy development within the NAFTA context took a prominent role in the symposium's agenda. The presentation of the paper "Opportunities and Barriers for Renewable Energy in NAFTA" provided an overview on the state of the renewables market and industry in the NAFTA countries, the government policies that affect renewables in North America and an analysis of the implications within the framework of NAFTA legal provisions.

The study found that renewable energy (hydro, wind, solar, geothermal and biomass primarily) in Mexico is declining as a percentage share of the energy budget as demand increases and the national policy emphasizes increased use of natural gas. Nevertheless, recent Mexican energy policy and legislative initiatives reflect a new urgency in encouraging renewable energy project development due to increased environmental concerns, spiking traditional energy prices and a desire for regional and local autonomy over energy supplies.

Additionally, the study suggests that Mexico's renewable energy potential is enormous, underutilized and its recent efforts to promote investments in carbon and emission reduction credits projects, arising from the Clean Development Mechanism of the Kyoto Protocol, may well accelerate the growth of the country's "green" power sector in the near-term.

Potential U.S. investors in the Mexican renewables market should take note of the analysis of NAFTA legal experts on the issues of investment protections, financial services and subsidies and tax incentives.

NAFTA's Investment Chapter's provisions on national treatment, performance requirements and expropriation are relevant to renewable energy investments and provides for a private right of action for damages against a NAFTA party, through the facility of investor-state arbitration.

There is also a strong argument for characterizing tradable renewable energy certificates or credits as financial instruments although, currently, there is no formalized NAFTA trading structure for certificates or credits.

Given the ambitious components of the CEC's strategic plan and the convergence of favorable market conditions, Mexico's move to encourage NAFTA investors in the national renewables market appears to be on the right track. For further information on the CEC, the symposium and the referenced studies, visit www.cec.org.

Edward M. Ranger, the only U.S. environmental lawyer licensed in Mexico, may be contacted at EdRanger@usa.net.
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Title Annotation:GREEN BIZ
Author:Ranger, Edward
Publication:Business Mexico
Date:Dec 1, 2005
Words:636
Previous Article:2006: trading gains for stability; The efforts of the Mexican government to armor the economy against any possible shocks persist.
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