Overview

On 10 December 2019, Alberto Fernández was sworn in as the President of Argentina, replacing Mauricio Macri. The new government has mainly focused its policy efforts on addressing the economic crisis that pre-dates the pandemic but has been exacerbated by it, putting further climate policy developments into jeopardy. The recovery measures taken by the government as of June 2020 aim to protect the oil and gas industry from collapsing prices and demand, while ‘green’ recovery measures remain largely absent in current proposals. The CAT rates Argentina as “Critically insufficient”. We expect that GHG emissions in 2020 will be 7%–9% lower than 2019. Argentina faces the economic crisis induced by the COVID-19 pandemic amid a changing government and an economic recession for the second consecutive year. The country’s energy sector and climate change planning will be largely influenced by the ongoing developments of the pandemic, the domestic recovery measures to confront the crisis, the external risks due to the collapse of international oil prices, and the renegotiation of its foreign debt. The government has not introduced any ‘green’ measures in its recovery stimulus plans but instead artificially fixed the domestic oil price at a minimum of USD 45 per barrel for 2020, irrespectively of the fact that international oil prices remain considerably lower. Although the new government has justified this intervention to protect jobs and the entire energy industry in the context of the COVID‑19 crisis, this measure constitutes a direct subsidy to rescue the oil and gas sector in Argentina. The government also capped electricity and gas tariffs to December 2019 levels until the end of 2020. Argentina has centred its energy sector strategy around the exploitation of abundant gas reserves in the “Vaca Muerta” formation as a source of cheap oil and gas for national consumption and exports (see our analysis of current policies). The strategy’s implementation potentially endangers the expansion of renewable energy in the Argentinian power sector and might lock end-use sectors into carbon-intensive pathways, leading to subsequently higher GHG emissions and increasing the risks of stranded assets. The CAT cautioned in June 2017 that natural gas has a limited role to play as a bridging fuel in the power sector globally, and runs the risk of overshooting the Paris Agreement long-term temperature goal and creating stranded assets.

Programmes and climate change legislation processes previously initiated by the Macri administration, such as the RenovAr programme or the NDC revision and Long-Term Strategy (LTS) processes, may be subject to change. Their progress might be particularly affected by administrative restructuring in the technical teams working on climate issues in the respective ministries and secretariats. For example, the Energy Secretariat has already been restructured by merging the former Renewable Energy Sub-Secretariat into a broader Power Energy Sub-Secretariat. In July 2019, the Macri government declared a climate emergency followed by the Senate passing a Climate Change Law in December 2019. The law positioned the treatment of climate change as national policy, institutionalised the articulation of activities and responsibilities related to climate change, and established minimum financial budgets for its adequate management, including the design and implementation of mitigation and adaptation policies. Macri announced the goal of achieving carbon neutrality by 2050. However, the recent change in government brings uncertainty around the implementation of these policies. The CAT’s Argentina current policies emissions projections are 5%–9% lower in 2030 compared to our previous projections in December 2019, mainly due to the impact of the pandemic on 2020 emissions and the revised historical emissions with lower emissions in the base year. The CAT rates Argentina’s target under the Paris Agreement “Critically insufficient”, as it is not stringent enough to limit warming to 2°C, let alone 1.5 ̊C.