With low reserves, a historical drought that hits the main export complex and the political order that there is no exchange rate jumpthe Minister of Economy, Sergio Massa, seeks to add financing. An alternative that they seek to unblock in the Palacio de Hacienda is “climate financing” by multilateral banks and the International Monetary Fund (IMF). The Government established a climate change mitigation plan for 2030 at a cost of more than US$200,000 million.
Although there is a range of financing alternatives for climate actions, ranging from green bonds and even debt swaps, The Government hopes that in the short term they can unlock credits with multilateral banks and with the Resilience Fund that the IMF created last yearwith the possibility of 20-year loans, through Special Drawing Rights (DEG).
The procedures are carried out by a sustainable finance table that makes up the Ministry of Economy, with Marco Lavagna at the head, and the Secretary of Climate Change, whose owner is Cecilia Nicolini. What they ask is that credits for climate financing be “new funds”and not those that are usually allocated for the development of emerging countries.
Another option that is being analyzed for the short term is the “carbon market strategy”, which is in article 6 of the Paris Agreement. It allows countries to exchange carbon certificates for a period of time, that is, the commitment to reduction of emissions in exchange for financing. “And then with those dollars to be able to work on climate mitigation and energy transition,” Nicolini explained in an interview on Public TV. “We are with some pilot projects and bilateral agreements that we hope to advance and announce in the coming months”anticipated.
One of the discussions that arises when this type of credit is negotiated, which may be to change production methods of the companies, is that there is room for “technology transfer” and that they are not “turnkey” sales processes, given that the Government considers that it is necessary to “develop national and scientific capacities so that the productive transformation generates more work,” explained Nicolini.
Argentina’s position is that the country’s financial creditors are environmental debtors. Massa took that concept to the latest international tours. Last month, at the G20 finance ministers’ summit in India, he called for “discussing other financing alternatives,” in addition to those provided by multilateral organizations, and providing “financial relief,” especially in a context of increasing rise in interest rates.
This was stated by Massa in front of his G20 peers: “We have at this table countries rich in economic-financial resources and countries rich in ecosystem resources. Our country is a financial debtor but it is an environmental creditor. The natural heritage and biodiversity of our countries serves humanity, making us unrecognized creditors in the face of financial creditors,” she stated.
In the Palacio de Hacienda they seek to get dollars so that the activity does not stop. The Rosario Stock Exchange once again cut the projections of the harvest due to the drought, and estimated it at 50 million fewer tons, an impact on exports of US$19,000 million. If the amount of dollars to supply imports is not compensated, the consulting firm PxQ estimates a drop in GDP of 3%. Without detailing concrete measures, a high source from the Economy assured: “In the second quarter there will be measures to compensate with other instruments for the lower inflow of dollars so that there is no drop in activity.”
In the Climate Change Secretariat, headed by Nicolini, they consider that there is a correlation between climate change and the current drought, because of how the rise in temperatures generates water stress, making phenomena such as La Niña more extreme. Due to droughts, it is estimated that in the last two decades Argentina lost more than US$24 billion in soybean and corn production.
millionaire costs
At the end of last year, the Ministry of the Environment presented a climate change mitigation and adaptation plan, with 250 measures to carry out by 2030, and thus advance in the energy transition, sustainable mobility, innovation in production processes and biodiversity conservation. In dialogue with Ámbito, Nicolini explained that They estimate the total cost at more than $200 billion.. “The cost of inaction can be very high as well,” she explained.
Nicolini explained that there is a “debt” from developed countries that in 2009 promised to grant US$100,000 million to developing countries for climate financing that was not fulfilled. Developing countries are currently calling for that figure to triple, and reach one trillion annually. “In the international conventions they demand more effort from us to accelerate decarbonization, the answer is yes, fantastic, we are committed, we know what we have to do, we have a plan, but for that we need cooperation funds,” Nicolini explained.
When asked by this newspaper about whether there is a contradiction between the decarbonization objectives and the plans to further develop mining and hydrocarbons in Vaca Muerta, Nicolini explained that the key does not go through the “prohibition of activities”, but rather to seek methods “more sustainable” production.
“There are sectors that are functional for the ecological transition, for example, lithium and copper mining is needed for electrification, electromobility, and wind and solar farms. Regarding the specific case of Vaca Muerta, he assured that “there is a consensus” that gas is important for the transition, as a much less polluting energy than coal. “There are countries that have up to 50% of their matrix with coal, by exporting gas we will be able to have an impact on the transition of our matrix and also on that of other countries,” she added.
Source: Ambito
