Regional Energy Integration Commission CIER CIER Argentine Committee CACIER Executive Secretary, CACIER Ester Beatriz Fandiño

THE ROLE OF TRADE AND MARKETS IN ADDRESSING CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT ICTSD SYMPOSIUM AT COP 16 Cancún December 8-9/2010

Latin America Integrated Existentes Under study Existente Under study Main pipelines planned Electrical interconnections in Latin America (MW)

Main CIER 02 Results Peru-Ecuador-Colombia-Venezuela Operating costs Peru – Ecuador – Colombia - Venezuela Interconnection boundaries The reduction of operating costs in Peru, Ecuador and Colombia were substantial in case A, while the operating cost increased in Venezuela.

CIER 02 Main Results Brazil-Argentina-Paraguay-Uruguay Annual Average of annual marginal costs SystemRef.Case A FromFor(MW) Argentina-MeBrazil-S2000 Argentina-MeBrazil – SE Argentina-MeUruguay Argentina-MeParaguay3000 Brasil – SUruguay Brasil-SEParaguay6300 Brazil-Argentina-Paraguay-Uruguay – interconnection boundaries Operating Costs The graph shows the operating costs of each country for the different interconnection scenarios. The operating cost for Paraguay is considered nil since all the demand is supplied through Itaipu y Yacyretá.

CIERs view 2010: As developing countries, our objective in Latin America is to move towards higher development levels, while achiving greater efficiency in carbon and emission avoidance.. integrated electric sector “integrated electricity infraestructure” As you all know, it will be difficult the shift to a low emissions path to economic growth for most of the developing countries. However, an easily integrated electric sector in the region will take advantage of the potential provided by hydroelectricity and complementary regimes of each system when consider isolated, and provide a quite clean support for economic development and poverty eradication. The de-coupling of conventional economic growth and emissions is possible in Latin America with an “integrated electricity infraestructure”

CIERs view 2010: We need a better comprehension for our productive electricity features as far as the Flexible Mechanisms is concerned. We also need financial resources –quite different from development aids- and technology transfer. In these terms there is a big gap for efficiency to improve intensity and economic output for each unit of carbon emission.

Main Results CIER 15 Project Date Ben. Oper.Ben. Emis.CostIBC Year(MUS$/year)(ktCO 2 /year)(MUS$/year)(p.u.) Economies of Scale PE – BRInambari N/C BO - BRC. Esperanza N/C Operating Security and opportunity exchange Central AmericaSIEPAC II PE - EC N/C 3 N/C BO - PE N/C AR - PY - BR Use of infrastructure BR – AR CH - AR 2015 Technically non viable PY - AR - CH Operating Security and energy exports CO – PA BR – UY BO – CH Total Remarks: 1 – Benefit calculated as the difference between the cost of the hydroelectric plant and the marginal cost of generation in the long term in Brazil; 2 – Amount not calculated due to uncertainty regarding the simulation of the hydroelectric plant in Brazil; 3– Information on transmission reinforcements not available. 4 –Due to uncertainty regarding systems operation, congestion entry in the interconnection was used as a proxy for operating costs reduction. 5 – Investment cost values and ICB for the BR-AR for the project were calculated on the basis of annual payment reported by the investors.

Participation of non-emission sources(EF) Wind, biomass, geothermal, small hydroelectric and nuclear stations

CIER Position Paper COP16 Points of consensus to address : LA electric region is “quite clean” in terms of GHG emissions, due to the past efforts, and the expansion axes of our capacity for generation are hydroelectricity, thermal generation based on natural gas – with the alternative of LNG- and non conventional renewable energies (NCRE). we ask to support Thus, LAC is able to contribute to the achievement of the reduction targets. For that, we ask to support the following measures:

CIER Position Paper COP16 Points of consensus to address (cont): 1. Perform prospective hydrological studies to face greater variability of future flows 2. Promote better understanding of the benefits of hydroelectric projects and its dams for multiple mitigation purposes and Climate Change effects (floods & droughts) 3. Support NAMA’s mitigation mechanisms & technological transfer. Includes CO2 capture/CCS

CIER Position Paper COP16 Points of consensus to address (cont): 4. Special considerations for the emissions of the thermoelectric stations needed for security & complementary to the generation matrix of the CIER countries, (focusing the trends to minimize the operating periods of thermoelectric facilities) 5. The negotiations must avoid making commitments that result in electric energy rate increases to consumers of the CIER region.

CIER Position Paper COP16 Last, but not least: Advocate for the continuity of CDM provided for Kyoto, with new improvements to: – Better comprehension of hydro matrix & benefits. – Enforce Energy Integration as a strategic contribution to GHG reduction (Project CIER 15 identified 12 projects to increase cross border transactions with environmental benefits of 7.8 millions tons CO2 avoided per year). – Promote improvements in the approval process of CDM project, for instance: agility and transaction costs.

Thank you ! CIER CACIER: Ester Fandiño