World Economy

China Generates Energy and Controversy in Argentina

China Generates Energy and Controversy in ArgentinaChina Generates Energy and Controversy in Argentina
“What we attributed in the past to US pressure we are now experiencing with China,” says Hernan Casanas, director of Aves Argentinas, the country’s oldest environmental organization

As in other Latin American countries, in recent years China has been a strong investor in Argentina. The environmental impact and economic benefits of this phenomenon, however, are a subject of discussion among local stakeholders.

One of the key areas is energy. A study by the non-governmental Environment and Natural Resources Foundation states that China has mainly been financing hydroelectric, nuclear and hydrocarbon projects.

Just 4% of these investments are in renewable energy, which is precisely the sector where the country is clearly lagging. “China’s main objective is to export its technology and inputs. And it has highly developed hydraulic, nuclear and oil sectors. There are no more rivers in China where dams can be built and this is why they are so interested in the dams on the Santa Cruz River,” Maria Marta Di Paola, FARN’s director of research, told IPS.

China is behind a controversial project to build two giant dams in Patagonia, on the Santa Cruz River, which was approved during the administration of Cristina Kirchner (2007-2015) and ratified by President Mauricio Macri, despite strong environmental concerns. The dams would cost some $5 billion, with a projected capacity of 1,310 MW.

However, expert Gustavo Girado said that it is not China that refuses to get involved in renewable energy projects, but Argentina that has not yet made a firm commitment to the energy transition towards clean and unconventional renewable sources.

“Like any country with a lot of capital, China is interested in all possible businesses and takes what it is offered. In fact, in Argentina it also has a high level of participation in the RenovAr Plan,” explained Girado, an economist and director of a postgraduate course on contemporary China at the public National University of Lanus, based in Buenos Aires.

He was referring to the initiative launched by the Argentine government to develop renewable energies and revert the current scenario, in which fossil fuels account for 87% of the country’s primary energy mix.

Also participating in this industry are Chinese companies, which during January-September 2017 produced 25% of the total oil and 14% of the natural gas extracted in the country.

Since 2016, the ministry of energy has signed 147 contracts for renewable energy projects that would contribute a total of 4,466 MW to the electric grid, most of them involving solar and wind power, which are currently under development.

The goal is to comply with the law enacted in 2015, which establishes that by 2025 renewables must contribute at least 20% of the capacity of the electric grid, which today is around 30,000 MW. In this sense, 15% of the power allocated through the RenovAr Plan has been to Chinese capital.

  Renewable Energies

One mega project in renewable energies is the Cauchari Solar Park, in the northern province of Jujuy, which will consist of 1,200,000 solar panels built in China and installed on a 700-hectare site.

The project has a budget of $390 million, of which 330 million will be financed by the state-owned Export-Import Bank of China.

China is also behind Argentina’s intention to develop nuclear energy, since in 2017 it was agreed that it would finance the fourth and fifth nuclear power plants in this South American country, at a total cost of $14 billion.

However, the Macri administration announced this month that it would indefinitely postpone the start of construction of at least the first of these plants, to avoid further indebtedness and reduce the country’s high fiscal deficit.

The decision is aimed at facilitating the granting of a loan from the International Monetary Fund, after the crisis of confidence that resulted in a massive outflow of capital and which put the local economy in serious trouble.

On the other hand, other energy projects funded by Chinese capital are going ahead, including four other hydroelectric power plants and thermal plants powered by natural gas.

  Eyes on Latin America

So far, the investments already committed by Beijing in the energy sector in Latin America’s third-largest economy total $30 billion, in addition to projects in other areas, such as infrastructure, agribusiness or mining.

“The Chinese looked first at their continent, then at Africa, and for some years now they have their eyes on Latin America. First of all, they were interested in agricultural and mineral products, and today they are not only the region’s second largest trading partner, but also a good investor,” Jorge Taiana, Argentine foreign minister between 2005 and 2010, told IPS.

The veteran diplomat recalled a point made by then US President George W. Bush at the 2005 Summit of the Americas in the Argentine city of Mar del Plata, where the region refused to form the Free Trade Area of the Americas.

“He (Bush) told us, ‘I don’t know why they care so much about the FTAA, when what we need to discuss is how we defend ourselves against China’,” Taiana said.

He maintains that it depends on the decisions of Argentina and the rest of the countries in the region whether they will benefit from or be victims of China’s aggressive economic expansion.

“Foreign direct investment is always beneficial. The secret lies in what conditions the recipients put in place and what their development plan is,” he said.

“What we attributed in the past to US pressure we are now experiencing with China,” said Hernan Casanas, director of Aves Argentinas, the country’s oldest environmental organization.

“The dams are a clear example of how this pressure for economic reasons could be trampling over the nation’s environmental sovereignty,” he told IPS.

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