Decálogo para el desarrollo del país a partir de la Energía.
1. Macroeconomic stability.
The economic activities of the energy sector are developed on a very long term horizon. Permanent and sustained inflation produces a macroeconomic imbalance that undermines the objectives of a healthy energy sector. A stabilisation plan and the recovery of fiscal federalism are tools that urgently need to be implemented. As part of this macroeconomic stabilisation plan, the energy sector must operate completely deregulated from state interventionism, de-monopolised and where free internal and external competition prevails, allowing for the eradication of chronic inflation. To this end, it is necessary to eliminate the tax burdens that discourage investment and distort energy prices and tariffs. At the same time, rules of the game must be drawn up that are compatible with
international market developments and to increase free competition. It is essential to return to fiscal federalism in tax matters, where provinces and municipalities are self-financed by their own taxes.
2. Integration with the world.
The energy industry is totally globalised and markets tend to expand beyond all political boundaries. Argentina must also be a player in these markets on the basis of its wide energy supply and the experience developed by its companies and professionals. The integration of regional markets should be a medium-term goal on the basis of free competition of supply and demand in this market. Reaching international markets will require a longer time frame but the first steps must be taken in the short term, it is imperative to develop the necessary conditions for gas exports quickly.
In the regional context, there is the possibility of exporting gas in a sustainable way to countries such as Chile and Brazil, demanding the expansion of a Vaca Muerta ring to Buenos Aires and Porto Alegre in order to increase exportable flows to the latter country. At the same time, agreements such as the ENARSA case should be replaced by agreements similar to the one between the United States and Canada.
3. Role of the State.
The energy industry should operate free of any state involvement or intervention (in all its jurisdictions). The State must only ensure free competition in energy markets and encourage the diversified and sustainable supply of energy sources throughout the country. The State's regulatory role is limited to preventing and correcting monopolistic practices in energy markets and encouraging the rational and sustainable use of energy sources, all in line with international best practices. "Free the captive users" is the political slogan.
The challenges posed by climate change must be taken on by the State by creating the necessary incentives to promote clean energy and decarbonise our energy matrix, in line with the guidelines adopted in international forums. Reducing "energy intensity" is also a basic premise of this energy policy. Natural gas is the energy source of the energy transition. The role of the state is to guarantee
competition in the wholesale oil, fuel, gas and electricity markets. Both transport and distribution should be deregulated segments, open to free competition. Eventual regulations would be limited to environmental issues and to avoid monopolistic practices. The state should make energy resources available for concession to private investors, allowing them to export, build infrastructure and consolidate markets. Companies such as YPF should go through a stage of purging shareholdings that do not contribute to their profitability, identifying non-strategic business units that are susceptible to sale. One of the competences that the state should exercise is to prevent
and sanction anti-competitive and monopolistic practices. If companies such as YPF or ENARSA are not profitable after the purification stage, they should disappear.
4. Expansion of energy infrastructure.
Railways in the 19th century are equivalent to gas pipelines and electricity grid extension in the 21st. This extension not only favours the export of energy but also an extension of connectivity and future infrastructure.
High-pressure gas and high-voltage electricity transmission requires regulatory adjustment to encourage private investment in new transmission systems and to increase competition in the segment.
Fulfilling the objectives of this Decalogue requires a vast and diversified energy infrastructure. The design, planning, implementation, financing and operation of this infrastructure should be in the hands of experienced private companies regardless of their origin, national or international. Concessions and licensing legislation should be brought up to international best practice.
Energy infrastructure should be planned, implemented and operated by private investors themselves. Existing legislation on concessions and licensing should be improved and updated in line with international best practice.
5. Electricity.
Argentina has a diversified supply in its electricity matrix and an adequate operational framework for this activity, although it can be updated. All generation sources must be planned, built, financed and operated by qualified private actors. In order to achieve a harmonious market where different generation sources coexist in the same market, it is essential that CAMMESA recovers its original functions and abandons the interventionist practices adopted in recent years.
decades.
As of next year, many hydroelectric concessions in our country will begin to expire. These concessions were duly granted by the National Government and their operation is regulated by national entities: ENRE and CAMMESA. In order to consider new concessions, either by renewing the current ones or tendering new ones, an updated operating framework that complies with all the points of this Decalogue is required, especially with a tariff regime that is sustainable in the long term. Given the short period of time until the first concessions expire, it is reasonable to consider an automatic renewal of the concessions granted and a future tendering process by the National Government based on the premises set out here. Renewable generation sources must compete freely with other sources in the energy matrix.
6. Oil & Gas.
Implementation of a new Hydrocarbons Law designed for a context that stimulates and encourages investment in the upstream, responding to a paradigm of abundance. This law should contemplate the complete deregulation of activities related to the exploration and exploitation of hydrocarbons, the free availability of the product for producers, as well as of the foreign currency obtained from its exploitation, and finally, tax stability, where the taxes in force at the time of signing the concession contracts will not suffer positive variations during their validity.
concession contracts will not undergo positive variations during the term of the contracts. In this respect, Law 17319 is a good starting point, although there are elements of this law that need to be updated.
This regime of promotion and stability for oil and gas investment should accompany the consolidation of macro stability and a general regime of exchange and trade openness.
7. Renewable Energies.
Moving towards the minimisation of the carbon footprint must be a priority, and renewable energies play a fundamental role in the energy transition towards this goal. Renewable energies must compete freely with other sources of generation and thus move from the predominance of renewables to clean energies. In this sense, CAMMESA's role is essential to ensure that RES-E compete freely and on equal terms with other generation sources. In order to protect the tariff framework and due to their energy and economic profitability, solar and wind energy will be the main renewables that will accompany gas in the energy transition. Their development must be carried out without compromising the security of supply and be integrated into the energy system through competitive schemes, as in Chile.
8. Biofuels.
As for liquid biofuels, bioethanol and biodiesel should grow in parallel to the remaining exploitation of gas and oil fields. The advantages of bioethanol should be exploited by Argentina because its production is renewable and therefore inexhaustible, which in turn will allow it to replace imports and increase exports, improving the trade balance. Argentina has a great comparative advantage over other countries, which is the vastness of its surface area. Biotechnological and genetic engineering developments will make it possible to make marginal land available for sugar cane cultivation.
The promotion of this activity will allow Argentina to comply with its Assessed Contributions, facilitating the inflow of foreign investment via "green bonds". The parallel development of biodiesel production will significantly reduce the carbon footprint.
9. Nuclear Energy.
The development of nuclear energy in our country is a desirable objective given its low operating cost and the important scientific and operational experience that Argentina has developed. The CAREM prototype, carried out by INVAP, is a priority and will allow not only its development at national level but also the possibility of entering the international market of small modular reactors. The management of the CAREM business should be entrusted to INVAP, including the search for private commercial partners who will
This is related to the impossibility of the state to carry out such investment, as well as to encourage private initiative for long-term investment in the CAREM prototype. On the other hand, the GASTRE project implies a long-term solution to the waste problem, in which the plan contemplates storing the waste confined in cylinders in Argentina's geological formations for thousands of years. Finally, Argentina must be able to refurbish Atucha I in 2024 to extend its useful life. The future power plants to be built, the role of NASA and the National Atomic Energy Commission must be rethought in the framework of sectoral restructuring. Nuclear energy must compete freely with other energy sources, and all new power plant projects must undergo technical, economic and environmental feasibility studies and be evaluated in the context of competition with other energy sources.
10. Innovation, education and communication.
Energy technology is constantly evolving, innovations are added daily in international markets: green hydrogen as a fuel, nuclear fusion, smart grids and smart power lines are all being explored by research and development centres. All that is needed is the right incentives to bring them to fruition over time. New ways of generating clean energy are encouraged by tax incentives for innovators.
At the same time, technologies that have technological and cost limitations will be covered by these tax incentives for those private companies that wish to undertake or innovate in new forms or cost-effective practices for energy other than traditional renewable or hydrocarbon energy.
The energy sector is in constant demand for semi-skilled and skilled labour. In this sense, the promotion of specialisation and professionalisation by national and regional universities will provide national labour for foreign and local investors, thus reducing the unemployment rate in the country and improving the quality of life of the population.
New knowledge in energy quality should be passed on to future generations through education at specialised universities and international academic exchanges. The focus should also be on creating a dynamic labour market that can absorb future job offers.
The communication of rational energy use and energy efficiency measures will help to coexist with energy price signals that allow economic costs to be recovered and make investments viable. In turn, communicating that the sector is a generator of investment and new skilled jobs should be matched by education plans. The sector should communicate and make transparent the validity of social tariffs focused on those who, due to social and economic indicators, require them.
Verifiable objectives:
1. 2023: Draft regulations with their respective sequences with the stabilisation plan and the structural reform programme to incentivise the intensive development of hydrocarbon resources (Hydrocarbon Investment Law).
2. Merge the gas and electricity regulators, and restructure CAMMESA to the proposed role by recreating the Wholesale Electricity Market on the basis of short-term marginal costs.
3. 2023: Strategic scenarios for sustainable energy development in 2040/2050. Higher gasification scenario vis a vis lower carbon footprint scenario to meet the emissions neutral target in 2050. The product of the study should guide energy policy in the development of infrastructure (gas pipelines and electricity transport, where one issue to think about is the opening to private initiative to build new gas pipelines with open access to third parties, including the National State) to achieve competitive energy with a lower carbon footprint, always calling on private investors in the execution and operation of the works (concessions-licenses). Interdisciplinary and multi-sectoral discussion of the scenarios and their conclusions.
4. 2024-2025: Restructuring and re-engineering of ENARSA, NASA, National Atomic Energy Commission and other energy companies. Reorientation of objectives, private participation in their capital, closure or liquidation.
5. 2025: Transparent and competitive bidding and awarding processes by the National State for the concessions of expired electricity works, after renewed operation of the MEM. Prioritise the awarding of concessions to the bidders that demand the lowest price per megawatt hour of electricity generated.
6. 2025: Progress in the realisation of a regional regulatory convergence framework for the creation of integrated gas and electricity markets. This is concomitant with the negotiation with the European Union for the approval and entry into force of the Mercosur-European Union Bilateral Treaty and its new energy-oriented axis.
7. 2026: Conclusion of the CAREM Project and immediate formation of an INVAP consortium with private companies to evaluate the possibilities of transforming the prototype into an exportable commercial project (Small Modular Reactor).
8. 2026: Completion of the second stage of the new gas trunk pipeline (Salliquelló-San Nicolás). Concomitant negotiation with Brazil for the closure of the Uruguayana-Porto Alegre ring. Gas export agreements with Brazilian companies.
9. 2027: New nuclear complementation agreement with Brazil for joint technology development and intra-industrial complementation.
10. 2028: Mercosur-China bilateral agreement with a focus on value added exportable from the region. Possibility of converting vegetable protein into animal protein and biofuels to add value to exports together with our trading partners. Greater exportable scale for Argentine and Mercosur biofuels.
11. 2028: On the basis of new investments and intensive development, especially of non-conventional resources, achieve a surplus energy trade balance of 8/10 billion dollars. We start from a trade balance currently in deficit by 5 billion dollars.
12. 2029-2030 - Entry into operation of a first liquefaction plant to export LNG to the European market. Around 10 million m3/d scalable in successive capacity expansions up to 40/50 million m3/d by 2035/2038.
Bibliography:
- Co-Builders: Molina, Ricardo - Meiter, Fernando - Mondino, Diana - Montamat, Daniel
- Storni, Adolfo - Sureda, Jose Luis - Varotto, Conrado.
- Coconstructors Organisations: AMES Argentina - Eternum Energy.
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