On November 18, 2021, US President Joe Biden hosted Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel López Obrador to relaunch the North American Leaders Summit (NALS) after a five-year pause. The countries have deep economic[1] and social[2] ties, and share vast borders.[3] The discussion at NALS focused on a few topics, including: the COVID-19 pandemic, competitiveness and economic growth, and migration. A set of key deliverables were agreed upon to launch a new framework of cooperation in the region.[4]
In this piece, the Center on Global Energy Policy’s Distinguished Visiting Fellow Leonardo Beltrán Rodríguez, Mexico’s former deputy secretary of energy, discusses some of the major developments related to energy and emissions that emerged from the summit.
Q. What were the key takeaways for the energy sector from the summit?
A. The three nations agreed to develop a North American Strategy on Methane and Black Carbon (NAMeth) to reduce methane emissions from all sectors, especially oil and gas. Methane emissions have 25 times more warming potential than carbon dioxide[5] and are therefore a focus of efforts to address climate change.
In addition, Mexico, the US, and Canada agreed to collaborate to accelerate renewable energy deployment across North America. This would include providing regional technical assistance, exchanging best practices, and catalyzing finance and technology development.
Q. Why did NALS focus on addressing methane emissions?
A. During COP26 in Glasgow, all three countries signed the Global Methane Pledge, in which more than a hundred jurisdictions committed to work together to reduce methane emissions across all sectors by at least 30 percent below 2020 levels by 2030.[6]
The oil and gas industry is the source of about 35 percent of global methane emissions.[7] North America is the third-largest methane emitter worldwide, responsible for emitting 14.1 million metric tons (Mt), right after the Middle East (18.1 Mt) and Russia (14.6 Mt).[8] The United Nations Environment Program indicates that the opportunities to cut methane emissions are readily available through detecting and repairing leaks, capturing associated gas, allowing gas flaring only in emergencies, and replacing fuel-based engines for electric motors at a cost of US$520 per metric ton.[9] Using this cost and estimated regional emissions (14.1 Mt) provides an estimated cost US$7.3 billion for methane emissions abatement in the North American oil and gas industry, equivalent to fewer than five days of the region’s oil production. Oil and gas companies and regulators could work together in the very short term to incorporate in the NAMeth a work plan to eliminate methane emissions, which could potentially be fully executed by the next NALS meeting next year in Mexico.
Q. What opportunities exist to increase regional renewable energy uptake?
A. North America is expected to have one of the most competitive prices for solar and wind technologies, according to Bloomberg New Energy Finance’s most recent levelized cost of electricity (LCOE) outlook. In the lowest-case scenario, the LCOE for both Mexico and the US (US$19.8 per megawatt/hour) would be 29 percent lower than the world average (US$28 per megawatt/hour).[10] Right now, the region expects to add a little over 700 gigawatts of renewable energy capacity by 2050 (Canada 45 gigawatts, Mexico 115 gigawatts, and the US 549 gigawatts),[11] creating opportunities of more than US$35 billions of investment per year to midcentury.[12]
Q. What could be some next steps to build on the NALS objectives?
A. To take advantage of the outlined opportunities, the summit could be followed by a North American regulator’s meeting. In such a meeting, all three regulators could meet with private-sector representatives from the region to discuss the methodologies, infrastructure, baselines, and reporting standards that could create a path for and accelerate the region’s transition to net-zero greenhouse gas emissions by 2050.
Notes
[11] Stephen Nalley and Angelina LaRose, “Annual Energy Outlook 2021 presentation,” Energy Information Administration, 2021, retrieved November 21, 2021, https://www.eia.gov/pressroom/presentations/AEO2021_Release_Presentation.pdfCanada’s Energy Future 2020, Canada Energy Regulator, 2020, retrieved November 21, 2021, https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2020/index.htmlPrograma para el Desarrollo del Sistema Eléctrico Nacional, Secretaría de Energía, 2021, retrieved November 21, 2021, https://www.gob.mx/sener/articulos/programa-para-el-desarrollo-del-siste….
[12] Assuming a capital cost of US$1,500/kw. For a detailed estimate of costs of new technologies, see: “Cost and Performance Characteristics of New Generating Technologies, Annual
Energy Outlook 2021,” US Energy Information Administration, 2021, retrieved November 21, 2021, https://www.eia.gov/outlooks/aeo/assumptions/pdf/table_8.2.pdf.
