Argentina s Draft Market Readiness Proposal (MRP) Partnership for - PowerPoint PPT Presentation

Argentina ’s Draft Market Readiness Proposal (MRP) Partnership for Market Readiness (PMR)

Presentation of Argentina’s Draft MRP: Outline • MRP process for Argentina • Argentine context for CPIs • EECs component: outputs and activities • RECs component: outputs and activities • Carbon Tax: outputs and activities • CPIs for Transport Sector • Cross-cutting activities and implementation arrangements

Working structure of Nacional Cabinet on Climate Change Structure of NCCC Thematic Roundtables Ministry meetings Sectoral meetings Transversal meetings Energy efficiency Focal Point Meetings Education, Culture and Information Renewable energy Climate Finance and Thematic Roundtables Carbon pricing Agriculture and Livestock Risk management and emergency COFEMA Meetings Forests Production Broad Cabinet Meeting Transport Infrastructure

Diversity of sectors driving Argentina’s emissions Revised NDC

Overview of Argentina’s climate policy development

Energy Transport

MRP Overview Evaluate the feasibility of implementing CPIs (implicit and explicit) in Argentina to support meeting NDC targets in key sectors RECs EECs • Analysis to support decision on REC • Analysis to support decision on EEC • Definition of scope and target for REC scheme • Definition of scope and target for EEC scheme • Design of EEC scheme, including institutional, • Design of REC scheme, including institutional, regulatory and technical infrastructure and MRV regulatory and technical infrastructure and MRV • Design of pilot for REC scheme • Design of pilot for EEC scheme Transport Carbon Tax • Mapping, assessment and prioritization of • Analysis of impacts of existing carbon tax program potentials CPIs for transport sector and potential extensions Cross-cutting (BB5) • Project management task force • Consultation, communication and outreach

Energy Efficiency Certificates Scheme EECs

Energy efficiency as key mitigation strategy for NDC goals

Total Internal Energy Supply 86.6 MMtoe

Energy Efficiency in Argentina - Background Normalization of energy markets Current Institutional Framework ▪ Comprehensive review of Ministry of Energy and Mining energy prices and tariffs ▪ Energy prices reflecting Energy Efficiency in Argentina cost of production Undersecretary of Energy Regulatory Framework Efficiency and Savings EE bill project: Argentina - Energy Intensity in Households toe / 1000 m2 • Targets, regulations, mechanisms 20,00 19,00 and education programs ENERGY EFFICIENCY IS 1 OF THE 18,00 17,00 • Create enabling context to 16,00 100 GOVERNMENT PRIORITIES 15,00 14,00 promote EE 13,00 12,00 • Trust Fund 11,00 10,00 2000 2002 2004 2006 2008 2010 2012 2014 2016

Energy Efficiency in Argentina – Current Framework HOUSEHOLDS INSTITUTIONAL INDUSTRY LABELLING FINANCING TRANSPORT SUPPORT REGULATORY INTERNACIONAL EDUCATION & COMUNICATION & DATA & FRAMEWORK COOPERATION BEHAVIOUR CHANGE MRV TECHINCAL CAPACITIES

Energy Efficiency Goal EE Goal: reduce energy consumption by 10,2% regarding business as usual scenario @2030 Savings by sector Savings by measures Ahorro 2017- 2030 Sector Medidas % 46% Appliances 67,3 Residential Residential Lighting 26,5 Home termal insulation 6,2 4% Public Lighting 100 Public Public Energy Management 65,0 Systems 22% Industry Cogeneration 17,6 Industry Motors Efficiency 17,4 Transport modal shift to 71,8 21% railway Transport Transport Road transrpot efficiency 27,1 Urban sustainable transport 1,1 7% Education & behaviour 100 Cross cutting change Cross Cutting 1

EECs as CPI for Argentina • Improvement in regulatory framework and EE policies, where instruments would accelerate implementations. • Significant mitigation opportunities from energy efficiency, but need additional policy instruments to support implementation of sectorial goals 30% of the Argentinean NDC an 50% of Energy NDC is based on Energy Efficiency measures . • Important recent work done analyzing energy consumption and barriers to EE -> opportunity to build on existing and planned programs

EECs as CPI for Argentina • Electricity and natural gas have different regulatory structures and institutions (e.g. ENARGAS, ENRE and provincial regulatory institutions) • MRP implementation should include analysis of the following as part of a feasibility study for EECs: • Limitation on energy consumption data – and implications for developing targets and MRV systems • Updating end-user barrier analysis • Implications of the different regulatory models for electricity and natural gas for CPI implementation.

Analytical process for EECs and RECs “pre - feasibility” Assessing Screening Analyzing potential appropriate potential impact interaction with modelling and on energy prices other policy analytical tools instruments Action Plan Modelling Engaging Identifying data for first potential demand stakeholder needs and market size groups 6 months Mapping barriers Creating high- Providing to RE / EE level scenarios recommendations

EECs and RECs outputs / deliverables Outputs Rationale Deliverables 2.1 Modeling and Need to understand the options and REC/EEC scheme Pre-Feasibility analysis to support potentials impacts of the RECs/EECs Study for Argentina BB2 decision on RECs/EECs scheme to decide on how to move as a CPI forward 2.2 Definition of scope Clarity is needed on scope and target to Formal decision on scope and and target for REC/EEC inform other decision on detailed design target for REC/EEC scheme scheme 2.3 Design of overall Enabling environment and infrastructure REC/EEC Design Study for REC scheme , including for REC/EEC scheme considering Argentina BB3/4 institutional, regulatory Argentina´s priorities and capacities and technical infrastructure and MRV 2.4 Design a pilot phase Piloting will be designed to test the Proposed institutional and for REC/EEC scheme enabling environment and infrastructure regulatory framework, technical before a full launch infrastructure, and MRV system

Renewable Energy Certificates Scheme RECs

Renewable energy/ electricity as key mitigation strategy in NDC

Renewable Energy Program 2016 - 2025 Regulatory Framework – Aim to Mitigate Risks Previously Round 1: 9/2016 • Round 1.5: 11/2016 Great wind and RenovAr Program Round 2: 10/2017 solar resources Round 3: 4Q 2018 Decrees • Distribution Law 531 and capacity 27,191 882 • Human Presidential Approved with 94% resources Decree both Chanbers of • High country Congress 1S’16 Corporate PPAs Legal risk Res. 6/2017 Framework (MATER) • No access to capital markets Comply with target of 20% by 2025 through private investment

Renewable Energy National Targets 2018 - 2025 Ex-ante RenovAr + Actions up to 2017 13.9% 3 GW 10 GW % of the total power demand 25% 20% 19% 18% 17% 20% 16% 14% 12% 15% 8% 10% 5% 0% 2018 2019 2020 2021 2022 2023 2024 2025 Actions up to 2017 Ex-ante RenovAr RenovAr Round 1 1.1 GW 2.7% 8.4 MMCO2e RenovAr Round 1.5 1.3 GW 3.0% Avoided with 0.8 GW Legacy Contracts (R202) 0.5 GW 1.5% all awarded 1.8% RenovAr Round 2 2.0 GW 4.9% projects Total 4.9 GW 12.1%

Renewable Energy Markets: 3 Contracting Mechanisms JOINT PURCHASE 100% of the 300 kW-or-less demand (RenovAr Programs and other and Large Users who do not opt out. mechanisms implemented by Price determined through Tenders. the MINEM) Opt-Out RE CORPORATE PPAs 100% MARKET (MATER) AGREEMENTS of RE Mandate Free negotiation by Large Users (>300 kW) who opt out. Annual Goals subject to penalties. Opt-Out Price and other T&Cs freely negotiated. SELF-GENERATION * With private generators, traders and/or distributors

Guarantee Mechanism: 2 contracts 3 Levels of Guarantee 20 years - USD payment - Lenders step-in rights - International arbitration Power Purchase FODER 1 2 CONTRACTS Agreement Trust Adhesion Agreement Energy Sales Energy Payment and Early Termination Guarantees FODER Sovereign World Bank 1 2 3 GUARANTEE Guarantee Guarantee Guarantee Energy Payment Termination Payment 1 Termination Payment 2

RenovAr Progress: (RenovAr 1 / 1.5 / 2 and Res. 202) 2018 2019 2020 2021 Expected commercial operation entries 660 MW 3,625 4,890 4,966 (accumulated) MW MW MW RenovAr Rounds 1 & 1.5 and Res. 202 RenovAr Round 2

RECs as CPIs for Argentina Argentina has existing aggressive goals for RE development - opportunity to use CPIs to support this goal and go beyond RECs as an incentive to implement RE long term projects Additional instrument to go beyond the Fulfill current commitments more efficiently current target Activities have been grouped into four main outputs: pre-feasibility, goal setting, full design, and designing a pilot.

Carbon Tax Impact Assessment and Extensions