Energy on the agenda as Obama heads to Mexico, regional summit

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Energy and environmental issues will likely be part of broader economic talks next week as US President Barack Obama visits Mexico and attends the Fifth Summit of the Americas in Trinidad and Tobago, a trio of regional experts said Friday.

The global economic recession will dominate discussions, but renewable energy as an economic driver will be a source of broad agreement, the former government officials and US diplomats said.

"Given the priorities, my sense is that energy and climate are going to be rolled into a broader discussion that the president will take not only to the region but on a global basis," said former diplomat Johanna Mendelson Forman, a Latin America expert at the Center for Strategic and International Studies.

Obama will leave for Mexico on Thursday where he will meet with Mexican President Felipe Calderon. The southern neighbor to the US is its second largest oil importer to the US.

The next stop on Obama's trip will be Trinidad and Tobago where he will attend the three-day Summit of the Americas on Friday, Saturday, and Sunday.

Trinidad and Tobago is the largest liquefied natural gas supplier to the US, according to the EIA. Other major energy suppliers in the region include OPEC member Venezuela, the fourth largest oil importer to the US, Ecuador and Brazil. Ecuador is also a member of OPEC and Brazil is a major ethanol producer with has recently announced several large offshore oil discoveries.

Discussions of Cuban oil development will also be on the table, the officials said. Grant Aldonas, former under secretary for international trade at the US Department of Commerce, said issues such as the 54 cent/gallon US ethanol import tariff would not be resolved now or any time soon.

The tariff largely affects Brazilian sugar cane ethanol imports and is vigorously supported by the powerful ethanol and farm lobbies in the US. Aldonas said there is "generally" broad agreement on pursuing renewable energy development in the hemisphere, given that many Latin American and Caribbean countries are considered ideal locations for biofuels, solar, wind, and tidal energy installations.

But with oil prices low due, the political and monetary costs of pursuing a renewable strategy could be difficult.

"In terms of renewables and the other sorts of alternatives, there is much less incentive and therefore also higher cost both politically and economically to pursue a renewable strategy," he said.

Peter DeShazo, a former career US diplomat and CSIS official, said he expects oil to be discussed in the Mexico meeting given that 40% of state revenue comes from taxes on the state-owned oil company Pemex.

He added that there is a good chance that Obama and Venezuelan President Hugo Chavez, a vocal US opponent, will sit down for a "side session" at the Summit of the Americas given the two countries' economic links.

Forman also said that Petrocaribe, a Caribbean oil purchasing alliance run by Venezuela, will also be discussed as will opportunities to expand US fuel markets to more of Latin American and the Caribbean.

The communique produced in advance of the Summit of the Americas calls for deep greenhouse gas emissions cuts and regional cooperation on climate change, especially in adapting to sea level rise.

"More effective regional cooperation for addressing energy security and climate change is now urgently required to mitigate the impact of drought and desertification, rising sea level, hurricanes, storm surges, flash floods and landslides, all of which impact urban and transport infrastructure, food production, industrial development, potable water supplies, forest cover and biodiversity," the document said.