CLIMATE CHANGE: ARGENTINA READY TO CONSIDER AN EMISSIONS TARGET

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005284777
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 8
• Document Creation Date: June 24, 2015
• Document Release Date: May 27, 2011
• Case Number: F-2008-00831
• Publication Date: October 16, 1998

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Intelligence Report
16 October 1998
Climate Chan e: Argentina Ready to Consider an Emissions Target
resident Menem is willing to examine Natural
Resources Secretary Alsogaray's recommendation that Argentina announce a
greenhouse gas emissions growth target' at the Conference of Parties in Buenos Aires
next month suggests that he may be ready to break ranks with the Group of 77 (G 77)
developing countries. However, he may not realize how much heat he will take from
China and India, which adamantly oppose targets for developing countries. The
success of his initiative will depend on how conciliatory he is to the G 77, the extent to
which lie finesses the details of the Argentine target, and the effort he makes to
showcase the potential of the Argentine economy to reduce greenhouse gas emissions.
If Menem announces a target, the United States probably will be criticized by European
Union (EU) member states as an alleged instigator because the EU has criticized US
efforts to recruit developing countries before the US itself reduces emissions at home.
The European environmental press, which will be in Buenos Aires in force, will join the
chorus of naysayers. At the recent Group of S meeting in London, France and Germany,
in particular, opposed movement on the issue of developing countries' targets at Buenos
Aires
The Umbrella Group of non-EU developed countries, Chile, Central American countries,
and the Alliance of Small Island States (AOSIS), however, probably will support an
Argentine initiative because they are sympathetic to the US case for developing country
targets. Brazil probably will be torn between the Foreign Ministry, wanting to criticize
1 This paper uses the US Council of Economic Advisers' definition of a growth target-one that is set higher than the current
emissions level but lower than the business as usual projection (BAU). Growth targets provide for continued economic development
but with a lower emissions rate. Argentina's adoption of a growth target would also allow the government or Argentine private firms
-such as YPF, the oil and gas producer and the country's largest corporation-to engage in an international emissions trading regime.
APPROVED FOR RELEASEL
DATE: 17-May-2011
 the US interest in developing country targets, and the architects of the Clean
Development Mechanism (CDM) in the other ministries in favor of keeping quiet--as
they did at Kyoto. Mexico and Republic of Korea, as OECD member states, will feel
F__ I
more pressure to follow Argentina's lead.
At the very least, a split in the G 77 will alter the dynamics of the Buenos Aires meeting.
The G 77 and the EU probably will be even slower than usual in formulating their own
positions to take account of an Argentine move and the meeting may be thrown into all-
night sessions to sort out the new landscape for the negotiations.
His second term ends next year, and he is ready to act in the statesman's role. In this
context, he probably considers a move will be good for Argentine-US relations, knowing
of the pressures on the United States to recruit developing countries to accept emissions
targets. He also knows that a target for the first commitment period of 2008-2012 will be
especially welcome.
? In addition, he may see his initiative as consistent with the environmental
cooperation he pledged President Clinton in the Barriloche Declaration last
year.
Political Risks Are Significant
Menem, however, may not be fully aware of the political risks his move will pose for the
success of the Buenos Aires Conference. Alsogaray has kept an Item 6 on voluntary
emissions targets for developing countries on the agenda as a placeholder for Menem's
move but has drawn fire since June even for that action.
 Secret?
Economic Ground Is Prepared
has rejected carbon taxes to constrain emissions as politically infeasible, continuing
expansion of natural gas, hydroelectricity, and nuclear energy make a target possible.
With the caveat that Argentina is vulnerable to spillover from the East Asian financial
crisis and to Brazil's current financial instability, the Argentine energy sector is
positioned to move toward an emissions growth target. Although the Energy Secretariat
lowering consumption of fuel per unit of output.
Natural gas production grew by 33 percent between 1990 and 1995. Thermal power from
steam--raised increasingly by gas rather than oil--generates 43 percent of Argentina's
electricity--a rate exceeded only by Netherlands and Russia. Gas flaring is being phased-
out, and Combined Cycle Gas Turbines (CCGT) with 50-60 percent thermal efficiency is
Gas is offering financial incentives for more private vehicles to convert from diesel and
Argentina is the world leader in converting diesel vehicles to Compressed Natural Gas
(CNG). Indeed, CNG has become the fuel of choice for 75 percent of the taxi fleet. YPF
gasoline to CNG.
 Argentina recently finished an expansion in h dro ower equal to one-third of the
maximum power load of the country in 1995 Hydro
provides 48 percent of the country's electricity. Argentina and Paraguay are building a
19,000 gigawatt plant on the Parana River and will soon turn it over to a private operating
company.
In addition, Argentina is building two nuclear power plants to raise nuclear's contribution
to 8 percent of total electricity generated by 2010.
Deregulation and privatization of state-owned energy companies--such as YPF--have
introduced energy efficiencies into the industrial sector that have, in turn, helped to limit
emissions growl Argentina consciously modeled its
deregulation policies in natural gas and electricity on the UK's deregulation of the British
electricity market.
 Argentina's Natural Gas Industry
Argentina has the second largest proven reserves of natural gas in South America after Venezuela,
Current production is concentrated in the same five basins
as Argentine oil production since oil companies discovered them in conjunction with exploring for oil.
The Gas Law of 1992 privatized ownership of Argentina's natural gas industry: two pipeline
companies and eight distributors. Private investors took over during 1992-1994. ENARGAS, the state
regulator, sets rates for natural gas carriers and is open to third party access.
Since the two pipelines currently operate near capacity, Argentina is building additional pipeline
capacity, not only for the domestic market, but for markets in Chile and Brazil. Gas Andes, led by a
Canadian corporation (NOVA), built and opened a $325 million, 290-mile pipeline across the Andes
to Santiago, Chile in 1997. TransGas, led by British Gas, Tenneco, and YPF (formerly the Argentine
state oil and gas company) is building new CCGT plants to come onstream during 1998-2001. In
addition, Alberta Energy Company, Marubeni, and Mobil are planning a $1.5 billion "Mercosur
pipeline from Argentina's northern gas fields to Sao Paulo, Brazil.
A consortium of British Gas, Enron, and Pan American Energy (US) propose to construct a $450
million, 4,000-mile pipeline from Patagonia to Porto Alegre, Brazil, according to press reports.
5
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 Table: Argentina: World Leader In CNG Vehicles
COUNTRY
CONVERSIONS
STATIONS
Argentina
427,000
580
Italy
290,000
280
Russia
205,000
187
USA
40,000
1,102
New Zealand
25,000
245
Canada
17,200
120
Brazil
14,000
39
Colombia
4,600
22
Indonesia
3,000
12
India
2,500
6
Pakistan
2,500
12
Germany
2,415
55
Chile
2,200
2
China
2,000
10
Venezuela
1,500
20
Australia
1,000
35
Other Countries
4,210
138
TOTAL
1,044,125
2,865
01 ified
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