Argentina slows climate action amid energy supply crisis

Reuters News
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Posted: May 10, 2012 2:50 PM
Argentina slows climate action amid energy supply crisis

By Marcelo Teixeira

SAO PAOLO, May 10 (Reuters Point Carbon) - While its Latin American neighbors move forward with national climate laws, Argentina is backsliding on actions to tackle its greenhouse gas emissions as the country struggles to meet energy demand from a fast-growing middle class.

Argentina's GDP grew 7.3 percent last year, driving demand for energy that is overwhelmingly derived from fossil fuels. According to Argentine Institute of Petroleum and Gas (IAPG), energy demand rose 5.1 percent in 2011.

Fossil fuels, which are largely imported due to a failure by local refiners to meet demand, account for almost 90 percent of Argentina's energy use. The value of fuel imports doubled last year to $9.3 billion dollars.

In a bid to boost oil and gas production to keep up with local demand, the Argentine government last month decided to seize a controlling stake in oil company YPF from Spain's Repsol, sparking international concern that Argentina may scare off investment.

Experts and government officials have recognized that greenhouse gas emissions are rising as a result of growing energy consumption.

Argentina emitted roughly 167 million metric tons (184.1 million tons) of carbon dioxide in 2009 related to its energy use, a rise of over 20 percent from 2000, according to the most recent data by the U.S. Energy Information Administration.

Argentina's Climate Change director, Nazareno Castillo, acknowledged that some of the country's near-term priorities may be met at the expense of increasing greenhouse gas emissions.

"It is obvious that a country's policies have a number of dimensions and climate change is just of them," Castillo said.

"The priority of this government is to reduce poverty and build a more equal society - not always is this going to result in lower emissions," he added.

CLIMATE STRATEGY

Castillo said that although the government is not developing a national climate change law similar to those passed in Brazil, Peru and Mexico, a special government-appointed committee has outlined the first phase of a 14- point national climate change strategy.

The committee is in the process of drafting a second phase, which will address emission reduction targets on a sector-by-sector basis.

"I believe that in some sectors we will be able to define emissions reductions targets. I am not sure if it will be possible to have an absolute target for the country," he said.

Castillo added that while energy-related emissions have led to a rise in CO2 levels, new and more restrictive forest legislation -- approved in 2009 -- may balance out the growth by reducing carbon output from forest degradation.

ENERGY OPTIONS

Some experts said that Argentina's current energy crisis provides a good opportunity for the country to overhaul its energy policy and move toward a less carbon-intensive matrix.

Maria Eugenia Di Paola, executive director of Fundacion Ambiente y Recursos Naturales (FARN), a major environmental research center, said the government should focus on what kind of development the country wants, not whose capital is behind it.

"The situation of Argentine energy mix is delicate. The case involving YPF should be a starting point to also discuss energy sustainability," Di Paola said.

She said President Christina Kirchner announced earlier in 2012 that the government would launch a program to boost clean energy projects, but it never happened.

"We are in an energy crisis. It is time to look for options. Besides biodiesel, there is not much being done on renewables," said Pablo Canziani, a climate researcher at the Pontificia Universidad Catolica Argentina.

"In this moment the country is increasing its CO2 emissions. Argentina is growing and several power units by gas or coal were opened recently."

Natural gas makes up to 53 percent of Argentine energy mix, followed by oil (32 percent), hydro (11 percent), nuclear and coal, with small shares, according to BP Energy Review.

CARBON ACTIVITIES

Independent consultant Federico Moyano, a former manager for carbon broker Ecosecurities in Argentina, said he sees climate issues losing importance in the government.

"Argentina used to have an important role in international negotiations on climate, helping to develop regulations and projects. But this was four or five years ago. From there on, there has not been much being done," he said.

With the absence of any plans for a local carbon market and the future restrictions by the EU on sourcing carbon credits after 2012, Moyano sees demand for Clean Development Mechanism (CDM) offset projects declining.

He added that the current nationalization issue will add to the difficulties of local project developers.

"Financing costs will rise and will become more difficult to convince investors to put money in carbon-related projects," he said.

Thiago Viana, project manager for Ecoecurities in Rio de Janeiro, said the company closed its Buenos Aires office around a year ago due to the lack of interest in carbon abatement projects in Argentina.

"We went through a restructuring process and decided to focus on Brazil, where we had more projects," he said.