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November 2008

Country Profile Argentina

Argentinia Flag Despite clear signs of impacts of climate change such as increased flooding along rivers and in coastal areas, people in Argentina are still slow in focusing on issues regarding sustainability and environmental protection. Since the disastrous economic crisis of 2001 and 2002, economic and social policy have been the country’s main priority. Its export-oriented economy has since taken off (8.7 percent growth in 2007) and investors’ confidence has to some extent been regained. Nonetheless, national debt (US$ 144.7 billion in 2007), inflation and political fragmentation have stymied exploitation of the vast and diverse CDM potential in what is the second-largest country in Latin America.

In part, this explains why Argentina is not among the sextet of Latin American countries listed in the top ten in DEG’s CDM Investment Climate Index (CDM ICI). 
Argentina still needs to clarify a number of issues regarding jurisdiction, implementation and monitoring of CDM projects. This is hampered by a fragmented policy landscape and lack of cooperation between policymakers, industry and research. If Argentina embraces climate change as a source of opportunity, its traditionally close relations with the EU and Germany could open the door to large-scale use of the CDM.
Memoranda of Understanding (MoUs) exist with Austria and Denmark.

Renewables are still under-represented, and the vast resources available, an ongoing energy shortage and a range of tax incentives already in place create major potential for increasing renewables use – mostly in the form of biomass-to-energy using waste from sugarcane processing but partly also involving geothermal heat. There is further strong potential for small-scale hydro power, and wind power may be promising in the south of the country.

Argentina’s project portfolio currently comprises 30 CDM projects, of which 14 are registered. These promise to generate approximately 27 million CERs by 2012. Spain – the former colonial power – is the most active investor country, with four project activities. Looked at in terms of project types, the portfolio is dominated by landfill gas flaring projects, both in the CDM pipeline (9) and among registered projects (5). These are followed by biomass energy projects related to agricultural and forest residues and biofuels. Energy efficiency projects in industry come next alongside domestic energy generation and domestic energy supply. Finally, there are two biogas projects, one wind power and one hydropower project, and two industrial gas projects.

Argentina’s DNA is the Clean Development Mechanism Office (Oficina Argentina del Mecanismo para un Desarrollo Limpio, OAMDL) of the Ministry of the Environment and Sustainable Development. The office has a Permanent Secretary, an Executive Committee composed of governmental representatives from the Ministries of Energy, Transportation, Agriculture, Industry, Science and Technology and Foreign Affairs, and an Advisory Committee that is composed of private sector representatives, NGOs and academics. The office is able to draw upon the expertise of the Argentine Carbon Fund (ACF) and an external advisory committee. The ACF helps projects in the initial stages of CDM registration, including PDD writing, methodology development, pre-feasibility and feasibility studies, identification of CDM project opportunities and identification of funding opportunities. The Fund has completed many PDDs and receives as its payment one percent of the CERs generated. As no CERs have yet been issued from its portfolio, the Fund has so far been sustained through donations. The ACF has its own selection procedure for accepting CDM projects in its portfolio, information on which can be found on its website (in Spanish).

Requirements for host country approval

The DNA approval process was established through Resolution 825/2004 of the Ministry of the Environment and Sustainable Development. Project proponents have to submit an approval request accompanied by a PDD in Spanish, seven copies, an English translation and an electronic version. The documentation must also include a note setting out the project’s contribution to sustainable development, including environmental, social, economic and institutional criteria, and documentation showing that the project complies with the relevant national regulations. An environmental impact assessment or environmental certificate from the competent authority is also required.

With respect to social criteria, a project’s contribution to employment generation must be described along with capacity building, corporate social responsibility and the general social situation and quality of life in the project area. The economic criteria include a profitability study together with details on the technology to be utilised and on the distribution of benefits. The institutional criteria refer to the institutional structure of the project proponent, which must be capable of ensuring the project’s continuity. The Permanent Secretary assesses whether the project complies with CDM requirements and with national environmental and sustainable development priorities. It publishes the PDD on its website and sends it to the local authority, which organises consultation. The Permanent Secretary prepares a report, including his opinion and comments from local authorities or other interested parties.

The Executive Committee receives this report, designates an evaluation institution (there is a registry of third party evaluation institutions), and decides on aspects that need to be evaluated, which may include technical CDM aspects (additionality, baseline, CER generation, crediting period, monitoring plan), economic aspects and technical feasibility. With the report from the Evaluation Institution, the Executive Committee decides whether to approve or reject the project and submits its recommendation to the Ministry of the Environment and Sustainable Development.

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