Foreword

Developing Countries & Global Climate Change : Electric Power Options in Argentina

Eileen Claussen, President, Pew Center on Global Climate Change

The Republic of Argentina is positioning itself at the forefront of the climate change debate among non-Annex I countries. It initiated market reforms in the early 1990s that made the economy more efficient while providing mixed, but on balance, positive, environmental results. In 1999, Argentina set a voluntary target to lower greenhouse gas emissions to between 2 and 10 percent below the projected baseline emissions for 2012. Additional policy choices that it makes to improve economic growth and lower emissions could serve as important examples for others facing similar challenges.

Argentina's electric power demand is expected to more than triple over the next 15 years, expanding by 6 percent a year. Emissions of greenhouse gases, however, do not have to increase at the same rate. The successful implementation of the market-based reforms and increased competition in power generation could continue to play an important role in the near future in lowering emissions from projected levels. This report describes the context for new investments in this sector and identifies principal trends under three alternative policy scenarios. The report finds that:

• Under a business-as-usual scenario, electric power generating capacity, primarily from large natural gas turbines and combined-cycle plants, is expected to increase 170 percent, growing from 17 gigawatts in 1995 to 46 gigawatts in 2015, at a cost of $26 billion. Carbon dioxide emissions are expected to nearly triple, growing from 4.8 million tons in 1995 to 14 million tons in 2015.

• Natural gas combined-cycle plants have become the most competitive alternative over hydro and nuclear power, and are currently the main choice of private sector power developers in Argentina. These plants produce less than half the greenhouse gas emissions of similar coal-fired plants, and have essentially no emissions of sulfur dioxide and particulates. If low-cost natural gas resources become restricted due to shortages, however, investments would flow to nuclear and coal-fired power plants. This outcome could raise total costs to nearly $45 billion, although greenhouse gas emissions would remain essentially unchanged due to the offsetting characteristics of nuclear and coal-fired plants.

• Adopting policies that favor renewable energy sources and nuclear power cost $32 billion by 2015 — about 23 percent more than the baseline — and would decrease carbon dioxide emissions from 14 million tons in the baseline to 11 million tons in 2015.

• Increasing energy efficiency by end-users and demand-side management would reduce total costs by $6.3 billion and carbon dioxide, sulfur dioxide and nitrogen oxide emissions would all decline 20 percent compared to the baseline.

Developing Countries and Global Climate Change: Electric Power Options in Argentina is the last of a series commissioned by the Pew Center on Global Climate Change to examine the electric power sector in developing countries, including four other case studies in Brazil, China, India, and Korea.

The Pew Center was established in 1998 by the Pew Charitable Trusts to bring a new cooperative approach and critical scientific, economic, and technological expertise to the global climate change debate. We believe that climate change is serious business, and only through a better understanding of circumstances in individual countries can we hope to arrive at a serious response.