José María Lujambio
The intense heat of an August morning in downtown Austin, Texas, was more than offset thanks to the refined treatment, serene voice and honest look of an admirable friend. A United States citizen who lived in Mexico for 7 years, working as a journalist, Soll Sussman has dedicated more than 20 years to unite both countries as the brain, heart and implementing arm of the classic Border Energy Forum. A few weeks before the XXII edition of this event took place in San Diego, California, this is how our conversation went:
JML: Soll, first of all, I would like to thank you for your generous availability during this very busy time for you. Please tell us a little about the history of the Border Energy Forum, how did the idea come about, and what was the context in the mid-1990s?
SS: The Border Energy Forum began in 1994 by the initiative of the Texas General Land Office. At the time, there was a lot of interest around the power plant Carbón II, near Piedras Negras, Coahuila, due to the contamination problem that it could have represented for the Big Bend region in Texas. We went to see the power plant and we were surprised to find that, in spite of its huge size and being within 10 miles of the border with Texas, no one in Austin had realized what it meant. At the same time, a nuclear waste project near El Paso, Texas, on the U.S. side, was being developed. This produced a lot of concern in Mexico and there was even a group of Mexicans that marched up to Austin in protest. It was striking that there was not more interaction between people interested in the energy sector at all levels in both countries, especially to address problems at an early stage.
Thus, that is how the idea arose to organize the “Mexico – United States Energy Forum” in October 1994 in El Paso, to which we invited 50 people from Mexico and 50 from the United States, from the public, private, academic and other sectors, to ensure an exchange of information and a dialogue on energy. At that time, energy was not a matter of headlines or a priority in terms of promoting economic development, but was taken as given, and environmental authorities wanted to measure pollution but not much attention was paid to the energy market by itself. Therefore, we thought it would be very interesting to increase the priority of energy in the binational dialogue. The original idea was to gather each year in El Paso because it is a central point for the entire border, but to make the event truly binational, it had to be held sometimes in the United States and other times in Mexico. Hence, the first two years we were in El Paso, then the third forum was in Monterrey, and since then we have alternated each year between the two countries. Of course we now attract many more people and always have a good balance between Mexicans and Americans, who have a truly binational, bilingual and bicultural conversation.
JML: A very fruitful dialogue over the last two decades, which has turned the Border Energy Forum into a reference for the analysis of energy topics. In editions XX in San Antonio (2013) and XXI in Monterrey (2014) there was a great expectation because the Mexican reforms were to be approved or were recently approved. However, in the last year, certain circumstances changed the scenario.
SS: The Forum of Monterrey was the largest we have had: more than 500 people participated, and almost all of the dialogue was on the Mexican reform because everyone wanted to know about it and discuss it. The truth is that in previous years we have had a balance, because the idea is to make good use of energy with best practices on both sides of the border. Therefore, it is very important to know what is happening in Mexico but also in Texas, New Mexico, Arizona and California. This year we will try to restore some of that thematic balance between the two countries, but certainly there is still a lot of interest on what is happening on the Mexican side as to the bids for hydrocarbons contracts, the restructuring of the electricity sector, and the outlook for renewable energy, etc. Of course, in October of last year oil prices were still very high and people thought that there would be big business for all; with the fall of prices, the expectation has subsided somewhat, but there is still a huge interest in the potential of the Mexican reform. Clearly, one of the most relevant topics in this edition will be the effect of prices on both countries’ markets.
I have many anecdotes after 22 years of working in this Forum. I remember that in 1995, during the Mexican economic crisis, one of the sponsors of the event told me, “So I imagine that the forum will be cancelled due to the crisis…”. I thought a moment and said, “Well, I do not think that people will turn off the lights, whatever happens, right? Then we have to continue.” So there was a Forum and since then we have continued with the dialogue. By the way, that company no longer exists.
JML: The flagship institution of the Border Energy Forum is the Texas General Land Office. Following the recent elections in the state, its new head is George P. Bush. Can you share with us what impact does his presence have, and what turn can it give to the Forum?
SS: I retired from the Land Office three years ago with the idea of doing new things: my own consultancy firm S Cubed Studio, working for U.S. companies seeking opportunities in Mexico and vice versa. However, the Border Environment Cooperation Commission (BECC) asked me to continue as coordinator of the Forum in collaboration with the Land Office and the US – Mexico Chamber of Commerce. As you know, the BECC and the Nadbank have a lot of interest in energy projects and for them the Forum is an opportunity to look for new projects to certify and finance, and also to put the spotlight on projects that they have helped to become a reality.
Of course, the arrival of Commissioner Bush this January presents a huge opportunity for the organization of the Forum, which has never had an individual that attracts so much attention by himself due to his public recognition. I feel very grateful that Commissioner Bush has shown much interest in the Forum, of course adding his own ideas and suggestions. Furthermore, the Land Office has taken an active role more than ever in planning the event.
JML: In recent months, an important phenomenon for the relationship between the two countries has been the construction of various cross-border pipelines, due to the bet of the Mexican government, through the Federal Electricity Commission, of importing cheaper gas at this juncture of massive production in Texas. Before a shale boom in Mexico, our countries will integrate much more in terms of natural gas trade, and eventually, of other energy products. I would like to know your opinion on this topic and its implications for our countries.
SS: When we started with the Forum in 1994, a principal theme was that of natural gas, since the first Mexican reform in this area was brewing. Through the years, a strong interest in renewable energy also emerged. In recent editions, we have returned to discussing a lot about natural gas due to the shale boom, given the fact that we share resources, for example, between the Eagle Ford and the Burgos basin, and due to the impact of the recent energy reform. Of course, it will remain a very important subject, perhaps with more emphasis than ever, both in exploration and extraction, as in transportation and marketing.
JML: In Mexico we have great potential in renewable energy, which we share with the United States along the border, especially in wind and solar resources. There are iconic projects such as Sempra’s in Baja California, but we would like to see more. Nevertheless, we find ourselves at an impasse, due to the disappearance of the incentives of the previous legislation for new projects, and because clean energy obligations (the U.S. “renewable portfolio standards”) have not been implemented yet. Do you think this will be sufficient stimulus? Do you envision more renewable generation along the border?
SS: I start again with an anecdote. In 1995, in the context of the second Forum, was the inauguration of the Texas Wind Power Project: 35 MW in the mountains of West Texas near El Paso. Then began what no one anticipated: now we have more than 12,000 MW in operation, being Texas the number one state in wind energy. We have seen the benefits of renewable portfolio standards but mainly of tax credits and, ultimately, technological competitiveness. Today, we know of very important projects of photovoltaic energy on the U.S. side, close to the border, which offer very reasonable prices. With the high prices of electricity in Mexico, there should be more and more opportunities for that kind of projects. I think we have arrived at a time when renewable energy is becoming a reality not only due to incentives but also due to its costs. I recently went through a maquiladora in Tijuana that has a solar installation of more than 1 MW, and I believe it is the largest on-site project in Mexico; hopefully there will be more opportunities like this.
JML: So many years of knowing the Mexican reality and being a protagonist of the dialogue between the two countries should give you a very clear picture of the direction of Mexico. There are structural reforms, which are very positive in general, but it seems that we need a political and almost cultural push to implement them. What should we do?
SS: I remain very optimistic about Mexico, very fond of Mexico. In the automotive sector, for example, we are experiencing massive investment; a few months ago, every week there was an announcement of a new company in the sector investing billions of dollars. I believe that the Mexican economy will continue to grow, especially because the incredible talent of its people. The opportunities in the energy sector are enormous and everything is ready to make them a reality, even though it may take a while to convince Mexicans and foreigners that we are at a moment of great change. I have noticed over the years that new ideas arise quickly but are not implemented as fast, because you have to convince a lot of people. You have to be very persistent. It appears to me that the Forum is a platform that offers that opportunity. When we started there was not a lot of binational dialogue and now there are numerous events more or less similar, although not necessarily within the same niche. The value added from the Forum is that we have endured for more than two decades, working seriously, and have helped to forge several alliances and specific projects as a result of the contacts promoted. The ambition of the Forum is to not only talk but to contribute to materialize projects.
JML: Finally, Soll, please give us some details of this year’s Forum in San Diego.
SS: It will be from October 14-16, 2015 in San Diego, California, in the Wyndham Bay Side hotel, just next to the bay. We will have Commissioner Bush as host and former President Vicente Fox as keynote speaker. Of course we will give special attention to the present and the potential of Mexico. Something very interesting is that we are changing a bit the format of the tours; due to the proximity to the border, we wanted to do something binational so we are offering two special visits on this occasion. On Wednesday, October 14th, some people will go to Ensenada, Baja California, to see the Sempra LNG terminal and also the Kyocera solar project and other sustainability elements in the El Cielo vineyard at the Guadalupe Valley. Another group will go to the Imperial Valley in California where there are many renewable energy projects, particularly solar and geothermal, several of which have been certified by the BECC and financed by the Nadbank. That Wednesday night will be the opening toast; on October 15th, there will be conferences and workshops throughout the day, which will continue through Friday, October 16th until 2:00 pm. We will have an intense program that we hope will be very beneficial for all attendees.
This edition of Mexican Energy Law was closed a few days after the XXII Border Energy Forum took place in San Diego, California. As expected, it was a first-quality event in all senses. Cacheaux, Cavazos & Newton makes a recognition to Soll Sussman and all the institutions involved in the organization, for their exemplary work.
1] Attorney at Cacheaux, Cavazos & Newton.
Category: Mexican Energy Law