REPLACEMENT OF NATURAL GAS RESIDENTIAL CONSUMPTION BY ELECTRICITY SO AS TO SOLVE ARGENTINE NATURAL GAS CRISIS AND REDUCE GREENHOUSE GASES EMISSIONS

Transcription

1 REPLACEMENT OF NATURAL GAS RESIDENTIAL CONSUMPTION BY ELECTRICITY SO AS TO SOLVE ARGENTINE NATURAL GAS CRISIS AND REDUCE GREENHOUSE GASES EMISSIONS by Martín Gesualdi, Tecnolatina S.A, Suipacha 1111, Buenos Aires, Argentine, Phone/Fax , 1. ABSTRACT Since 24, Argentine natural gas production, as well as reserves, began to decline after decades of constant growth. High growth rates of the economy, added to the population increase, triggered the demand of natural gas (NG) into an endless growing scenario. Ever growing imports of liquefied natural gas (LNG) were not enough to compensate declining of local supply, and was also necessary to reduce exports to Chile and restrict the consumption of industrial demand during winter season so as to be able to satisfy residential consumption. As residential demand was and still is- so high during winter season such restriction to the industry was not enough and the deficit forced reductions also to the gas fired generation requirements. The scarcity of NG and the increase of the power demand during winter forced to dispatch a great percentage of the thermal park fueled with liquid, which therefore increased electricity prices. This hit negatively in Argentine trade balance since it was necessary to import part of these amounts of fuel. As a consequence the use of liquid fuels generated more greenhouse gases emissions than those produced by NG. This scenario displayed several long-term disadvantages in economy, environmental and energy policies. Considering this framework we propose to carry out a medium-term action so as to normalize the actual scenario. The proposal is to replace the NG residential consumption by electricity. Nowadays technology allow to heat, cook and warm up the water without using NG, replacing it by electricity. So the proposal creates fiscal and economic incentives looking for a gradual replacement for the following ten years. This plan would set free more than 6% of the supply (including imported amounts) of NG for industry and power generation. As a consequence, the winter restrictions to the industry will disappear and generators will have available more NG to generate. 1

2 In addition to the proposed plan, we forecast the electrical matrix up to 223, including projects set by Secretary of Energy to respond to Renewable Energy Law which establishes that in ten years, the 8% of the primary matrix should shift into renewable. Most forecasts are predicting that both NG production and reserves will continue to decline at least within the next 5 years. It is also assumed increasing volumes of imports. Beyond the fifth year it is supposed that shale gas could start its development, replacing the imports of NG and LNG. The matrix -estimated for 223- shows a considerable reduction of greenhouse gases emissions. 2. INTRODUCTION Since 24 argentine NG production and reserves have been declining as a result of the lack of investments, due to the signals sent out by local authorities. Low and fixed NG residential rates don t encourage Gas Companies to make necessary investments. As a consequence Argentina changed its condition of net exporter to a net importer. This situation occurred in a context of an important growth of residential and industrial NG demand. The industrial demand grew as a result of the growth of the economy. On the other hand, residential demand grew pulled up by GDP s growth and because of an irrational use of energy as a consequence of low rates. For eight years residential consumptions had no incentives to consider any program of energy efficiency. GDP s high growth rates implied the increased of power demand of all consumer sectors. This new demand was provided basically by new thermal plants. So, it was necessary to use more fuels in order supply this new consumption. As a consequence, during the period , it was necessary to dedicate greater volumes of gas and liquids to power generation. Then, as a consequence, of the increasing demand and the declining production of NG, it was required to import liquids fuels and LNG so as to be able to supply new thermal power stations in winter season. Still, restrictions to industrial consumers in winter were necessary. So, in the last ten years Argentine energy paradigm changed completely. Comparing 24 with 213, the situation is the following: Net Exporter of NG No restriction tu industrial users Argentine Natural Gas Market No restriction to power plants Economic equation of both businesses (up & dowstream) profitable and sustainable Table N 1 Net Importer of NG Import of large volumes of gas and liquid fuels Need to restrict industrial demand Economic equation ruined This new framework has a direct negative impact to the Argentine trade balance. 2

3 Changing the trend is not an easy and fast challenge, however, it s proposed a change in the behavior of residential energy consumers so as to solve balance trade conditions and reassign correctly the local resources to other consumptions, in order to avoid imports that strongly impact in the development of domestic economy. The replacement of NG residential consumption by electricity will imply the following: Eliminates the gap between domestic NG supply and demand. Eliminates energy trade balance deficit. Reduce greenhouse gases emissions The main objective of the proposed policies is not also to improve energy efficiency in domestic use but to improve general conditions of NG market without generate an impact on families economies and welfare so as to maintain the same standards of heating, cooking and warming up water. The policies generate positive externalities to the economy releasing more gas to the power plants and industries, allowing the reduction of NG imports. Parts of those imports are paid by families directly through a charge in their gas invoices and indirectly through subsidies paid by public funds. Related to energy efficiency it will propose the use of new devices labeled with the highest degree of energy efficiency. 3. SITUATION: According to the current situation of Argentine energy market, the evolution of the energy market variables during the last ten years is as follows. Argentine NG production declination, as a result of the lack of incentives to invest, had become the main important problem of energy market. Figures below show the historical evolution of argentine NG production Natural Gas Argentine Production (MMm3/d) Argentine Natural Gas Production (MMm3/d) ,2 1,8,6,4, Figure N 1 Figure N TCF = 28, millions of m3. Argentine NG daily demand is near 4.6 BCF. 3

4 Reserves of NG also went down as a consequence of the lack of investments in exploration and development. From 2 up to 211 the average annual declination of reserves rate was 7 %. On the other hand as reserves declined and consumption increased the Reserves to Production Ratio (measured as the years of domestic reserves to be able to supply markets) was reduced from 17.2 in 2 to 7.3 in Argentine Natural Gas Reserves (MMm3/d) -57% Figure N 3 As we mentioned before the main cause of falling production was the absence of incentives to invest for producers (Oil & Gas Companies). Residential rates (fixed in domestic currency) caused that the average price that producers receive for each m3 2 produced is remarkably inferior to the one they should receive in other countries of the world or, even across the region. The next table shows the average price paid by different types of users for wellhead gas in the period Average Natural Gas Tariffs usd/mmbtu Residencial 2,,7,67,65,62,59,57,55,53,5,48,47 Industry 1,5,89 1,3 1,2 1,39 1,62 1,88 2,19 2,54 2,96 3,44 4, Power Generation 2, 2, 2, 2, 2, 2, 2,8 2,8 2,8 2,8 2,8 2,8 VNG 1,5 1,6 1,86 1,85 1,8 1,79 1,74 1,59 1,43 1,37 1,27 1,86 Weight Average 1,8 1,24 1,3 1,34 1,38 1,44 1,75 1,82 1,9 2,2 2,14 2,37 3 Table N 2 The table shows that the price, in dollars, perceived by producers practically stayed constant and below international values. Assuming a proportion of annual average consumption of residential (3%), industries (3%), generation (3%) and NGV 4 (1%), it shows that the annual increases were very low, because the only value that had been adjusted was the industrial price. Whereas residential tariffs have stayed constant in local currency and therefore its value in dollars was reduced as a result of Argentine peso devaluation. 2 Cubic meter 3 Market prices 4 NG Vehicular 4

5 The scarcity of incentives and signals for investment caused the falling in local production. So a considering higher demand, made necessary to import higher volumes of NG from Bolivia as well as through LNG. This situation turned energy trade balance negative. Figure N 4 shows how exports to Chile fell strongly from 26. On the other hand, imports had an exponential increase since 28 when the gas pipeline from Bolivia increased its transport capacity. In 29 started the import of LNG through a regasification floating facility, in Bahía Blanca (7 km south from Buenos Aires), capable to put regas LNG into the local transmission network. In 211 a new regasification plant was installed to the north near Buenos Aires. All the 3 points of import (45 MMm3/d), could supply almost 4% of local consumption Imports and Exports of NG (MMm3/d) Argentine s Natural Gas Exports Argentine s Natural Gas Imports Starts LNG Imports Figure N 4 It is important to highlight that, the situation of the power market is different from the gas one. Nowadays, Argentine power market shows some idle capacity (oversupply). In spite of, fragilities of regulatory framework, tariffs that do not remunerate costs and scarcity of investment, power generation is still able to afford the demand. The following figure shows the evolution of the installed capacity, the power available and the monthly maximum of power demand from 2 until now. It is shown how the demand grew with a fixed supply until 25, when the local supply began increasing, in order to provide new demand. 5

6 35 Demand and Supply of Power (GW) Monthly Peak of Power Demand Installed Capacity 5 Power Available Figure N 5 The new generation was based on thermal fired facilities (mainly Combined Cycles), that had to be supplied by NG and liquid fuels (diesel oil and gas oil). These fuels had to be imported in winter season. Figures N 6 and N 7 show the growth of the thermal generation in last decade Power Generation by type of Generation (GWh) Power Generation by type of Generation (GWh) Allthese new termic capacity needs imports fuels Nuclear Termic Hidraulic Imports Termic Hidraulic Nuclear Imports Figure N 6 Figure N 7 The following graphs show how fuel consumption increased for the last ten years. It is remarkable how liquid fuel consumption grew during winter seasons. That was a result of the NG shortage by the decline of the production displayed in figures N 1 and N 2. 6

7 3.5 Fuels for Electricity Generation Fuels for Electricity Generation Mdam3 of Natural Gas Mdam3 of Natural Gas Fuel Oil [kton] Diesel Oil [mm3] Coal [kton] Natural Gas [mdam3] Biofueles [kton] Abr Jul 7 7 Oct 7 Ene 8 Abr Jul 8 8 Oct 8 Ene 9 Abr Jul 9 9 Oct 9 Ene 1 Abr Jul 1 1 Oct 1 Ene 11 Abr Jul Oct 11 Ene 12 Abr Jul Oct Natural Gas [mdam3] Fuel Oil [kton] Diesel Oil [mm3] Coal [kton] Biofueles [kton] Figure N 8 Figure N 9 This increment of fuels consumption for power generation implied the need of import considerable amounts of liquid fuels and gas by LNG 5. Figure n 1 shows Argentine energy trade balance of last 1 years (213 esteemed). It is important to note that, from 211 trade balance turned negative. 12. MM usd 1. MM usd Argantine Energy Trade Balance [MM usd-213 estimated] 8. MM usd 6. MM usd 4. MM usd 2. MM usd. MM usd -2. MM usd -4. MM usd -6. MM usd e Energy Exports Energy Imports Energy Trade Balance Figure N 1 Trade balance turned negative mainly because of LNG imports, which increased strongly in last 3 years. These volumes are dedicated to solve the gap between NG demand and production, which increases during the winter as a result of residential demand growth. The following graph shows the evolution of residential demand during annual period. 5 It is important to note that LNG cost is approximately 16 usd/mmbtu, whereas Bolivian Gas rounds 1 usd/mmbtu, and local producer received and a average price of approximately 2,4 usd/mmbu 7

8 Natural Gas Demand [MMm3/d] VGN, 1 Industry, 35 VGN, 1 Industry, 27 Electricity Generation, 2 MMm Use of NG Residential Demand 212 Heat (54%) 212 Other uses (46%) 6 4 Electricity Generation, 35 Residencial, Residencial, 4 1 Average Winter Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Figure N 11 Figure N 12 Considering the evolution of last decade, the next graph shows the power matrix of 212: Liquid Fuels, 16,2% 212 Argentine Power Matrix Coal, Imports, 2,1%,3% Renewable,,3% Hidraulic, 29,1% Natural Gas, 47,3% Nuclear, 4,7% Figure N 13 Argentine power matrix has an important reliance on hydrocarbons. However, only an 18 % of electricity is generate with coal, diesel oil and fuel oil. It is important to note that these fuels generate more greenhouse gases emissions than NG does. According to Greenhouse Emissions Standards, in 212 the power matrix generated 47 millions of tons equivalent of CO2. And considering that TWh were generated by power matrix, the tons eq. of CO2/MWh coefficient was.38. The following table shows those details. 8

9 212 Argentine Power Matrix Greenhouse Gases Emissions 212 % GWh Tn eq. Of CO2 Hidro 29,1% Nuclear 4,7% 5.95 Renewable,3% 323 Termic with NG 47,3% Termica with fuels (1) 18,3% Imports,3% 423 Total 1% ,38 TN eq CO2/MWh Table N 3 4. PROPOSAL 4.1 THEORICAL ANALISIS The proposal looks for solutions of short and medium term to solve NG imbalance between domestic supply and demand, despite it is important to remark that from the point of view of energy efficiency the proposal allows to use less NG for the same level of welfare. So changing consumer behavior it can save a significant portion of NG consumption, reducing imports and restrictions to industry. The following theoretical exercise is an abstraction of reality that is based on actual average values of 212, technical heating artifacts specifications and assumptions needed to make this theoretical exercise. The exercise is based on the following assumptions: Historic temperature of period from May to September: C (55,76 F). Temperature necessary to keep households warm: 22 C (71.6 F). Average consumption of the stoves to heat a room of 6 m3:.323 m3/h. Average consumption for the air conditioner-split to heat a room of 6 m3: 12 watt/h. Average residential consumption for heating May to September 212: 38.2 millions of m3/d. Average national thermal performance park 23 kcal/kwh. 9

10 Based on the above assumptions, actual situation of residential natural gas consumption is the following: 38.2 MMm3/d NG Heat at homes The 38.2 MMm3/d allows heating 4.94 millions of rooms of 6 m3 Replacing natural gas for heating consumption by electricity, maintaining the same level of welfare the situation would be: NG 38.2 MMm3/d 154,5 GWh/d Thermal Plants Heat at homes The 154 GWh/d allows heating 5.36 millions of rooms of 6 m3 (23 kcal/kwh) The diagram above shows that using the same volume of NG to generate electricity considering the actual thermal park, and the using efficiency air-conditioner split to heat, more households could be heating. So, to heat the same quantity of households, less NG should be required. In this case the diagram is the following: NG 35.1MMm3/d Thermal Plants (23 kcal/kwh) 141,9 GWh/d Heat at homes The 35.1 MMm3/d allows heating 4.94 millions of rooms of 6 m3. Comparing with the first diagram 3.1 MMm3/d less are required. Therefore, making a theoretical abstraction of reality, it can be appreciated that, considering the assumptions, for the same level of individual s welfare, an 8% less of NG volumes should be consumed. However, considering that power should be generate with Argentine Power Matrix, only a 48 % of the GWh needed to maintain the same level of comfort during the winter, should be generated with NG. So that, the volume of natural gas required for generate those GWh should be less than 38.2 MMm3/d. In this case, the current Power Matrix should need only 16.8 millions of m3/day. Hence 21.4 MMm3/d would be released during winter. Considering that this volume is inferior to the volumes imported during winter (32 MMm3/d), the 21.4 MMm3/d saved gas shouldn t be imported, causing savings for 1,62 millions of dollars 6. However, the cost of the remaining 52 % power that should be 6 The NG weighted average price of import was estimated in usd/mmbtu. 1

11 generating by the remaining matrix is estimated in 497 millions of dollars 7. So, the net savings are calculated in 1,15 millions of dollars. In conclusion this theoretical exercise tests that: For the same level of welfare less NG for heating should be required. The reduction of NG use should reduce NG imports, generating economic benefit to the economy. It should be remember that this theoretical exercise reduces reality to a conceptual analysis abstracting some variables that could affect results. However, it shows that from the point of view of thermal and energy efficiency the proposed policies are not unfavorable. The exercise shows a photo of 212 scenario considering all the replacement of NG residential consumption by electricity. However the proposal scenario will shift gradually until 223, improving thermal performance and diversifying power matrix. 4.2 POLICIES TO CARRY OUT In order to normalize the scenario referred it proposes the replacement of NG residential consumption by electricity so as to promote important benefits to economy and environment in short and medium term. In order to carry out the proposal efficiently, government should implement strictly the following policies: To increase residential NG price. Although NG residential demand is not very elastic with respect to price, Argentine residential consumers perform an irrational use of energy. So that it is consider that an increase in NG price will cause an abatement of residential demand. The policies propose to increase residential gas price through the elimination of subsidies 8 and an increment of wellhead gas residential prices. The increase of wellhead gas residential prices should encourage Oil & Gas companies to invest in exploration and development. It is supposed that an increment of 2 % in NG residential price will not impact strongly in residential inflation. The actual average residential NG cost represents less than.5 % of monthly residential average income. To subsidize electrical devices for heating. To carry out the policy proposed is required the installation of heating electrical devices with high energy efficiency. So electrical devices for heating should be subsidized. 7 The average electricity price according to the 52 % remaining matrix was estimated in 44 usd/mwh 8 Nowadays, mostly residential users have subsidized rates. Basically the subsidy is used to subsidize the cost of residential users for imported gas. 11

12 At the same time, it should be necessary to subsidize heating electricity price 9. To forbid the use of NG in new buildings. To determine by law the prohibition of new residential NG consumers. All these policies are proposed to be carried out in the following ten years. They will provide gradually the following benefits: Less emission. The decrease of Greenhouse Gases Emissions will occur as a result of the reduction of liquid fuels used to generate power. In 212, the 16 % of the power was generated with liquids fuels. The burning of these fuels caused the emissions of 14.2 millions of tons eq. of CO 2. Considering that generations with liquids will be replacing with NG, renewable and new hydraulic plants, the CO 2 emission/mwh coefficient will be reduced considerably. Greater available gas for industrial consumption. The reduction of NG consumption by residential users will release high volumes of NG for industries during winter season. This will avoid the limitations that industry usually suffered in winter. The industrial activity during the winter period performs a seasonal reduction of production as a result of NG restrictions. Although some industries have the possibility of using substitute fuels, most of them cannot do it because of technical and competitiveness issues. It is supposed that Industry will have NG available in winter for the next 1 years, even considering an annual 4 % rate of growth. More NG available for Power Generation. Residential gas consumption reduction will also provide greater NG availability for thermal plants. During the period thermal generation showed an important dependency of liquid fuels during winter. The NG availability during the winter is reduced a 6%. So it was necessary to use liquid fuels, which reduce thermal performance. It is supposed a gradual reduction of liquid fuel use for the next ten years. Less Import. It will be necessary to continue importing NG for the following five years until unconventional gas production starts development. The imports of LNG should be required so as to compensate domestic production declination. However from the sixth year local production could provide domestic consumption, considering the reduction in residential demand and the new production of unconventional gas. Energy trade balance surplus. The reduction of imports of NG and liquid fuels for power generation will cause a positive effect in energy trade balance. The reduction of liquid fuels and LNG imports will reduce energy s trade balance deficit. It is suppose that in 7 years energy trade balance will be surplus. 9 Consumers should inform KWh used for heating. 12

13 And, may be, in the long term when unconventional hydrocarbons start development, Argentine could export NG to the region through pipelines already built and also by LNG through a liquefaction plant. Idle capacity in Power Market. The power market is more flexible to support increases in the demand than NG market. The policies proposed imply not only a more efficient use of the energy but also a transfer of consumption. Nowadays, power market has some idle capacity able to absorb the increase of residential demand during the winter. Unlike the NG market the power one is more competent to offer better answers in case of a high growth of the demand. Wellhead producers received price would increase. According to the proposal, the number of residential gas users will reduce gradually. And considering that they paid the lower wellhead price, producer will receive a higher weighted average price because industrial and thermal plants price is much higher than residential price. So if producers forecast a higher wellhead price, they will be encouraged to increase investments at exploration and development. Despite the proposed policies would generate significant benefits to energy market and local economy is important to note that some industries related to NG industry will be harmed. Especially those related to the production of stoves, cookers, water heaters and all those domestic appliances that use NG. However the reduction of household consumption will be gradual. On the other hand, activities related to industrial and power plants consumption will still working. 5. ASSUMPTIONS : The analysis is based on the following assumptions: Nonconventional gas will start development in 217. Argentine is one of the three countries with more potential in the Nonconventional Hydrocarbons (NCH) development. According to IAE data, Argentine has resources of NCH equivalent to 774 TCF. In order to be able to transform these resources in reserves it is necessary an important contribution of capital. It is supposed that first nonconventional Gas field s starts production in 217. Progressive reduction of NG Imports. For the next 4 years NG imports will be still necessary. It is supposed that NG Imports will increase until Shale Gas starts production, considering the strong declination of domestic production. It is hoped that the volume imported from Bolivia will stay constant and LNG Imports will grow for the next 4 years. The assumption supposes the following evolution: 13

14 Proyected supply of Natural Gas (Millions of m3/d) Year Available Local Production Imports Demand (*) (*) In 217 starts No Conventional Gas production 1 Table N 4 Reduction of residential NG consumption for heating. The replacement of NG residential consumption by electricity would occur gradually. The policy proposed should stimulate to modify the behavior of consumers who are able to replace the NG consumption for heating. Basically it would encourage the replacement of stoves by efficient split air conditioner & heat pump high efficiency devices. Then the policies imposed will reduce residential consumptions for cooking and warm up water for bath. The estimation of consumptions evolution is the following one: MMm Evolution of Natural Gas Residential Demand Heat (54%) Other uses (46%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 11 Figure N 14 1 It is forecast that since 222 will start exports. 11 Historical climatic conditions were considered to forecast residential demand 14

15 Growth of residential power demand in winter. The reduction of NG residential demand causes the transference of consumption towards the residential power demand in winter. According to the analysis made, by each MMm3 reduced, power demand would increase in average 11 GWh. Then, considering that efficiency of electrical devices installed in homes will grow, the coefficient will reduce, as is shown in the following table: GWh equivalent to 1 Million of cubic meters of NG Millions of m3 released of NG as consequence of residential consuption reduction GWh/d equivalent Power capacity necesary to provide this new demand 214 7,865 GWh 1 MMm3/d 79 GWh/d 4.53 MW 215 5,898 GWh 18 MMm3/d 17 GWh/d MW 216 5,14 GWh 28 MMm3/d 14 GWh/d MW 217 4,312 GWh 35 MMm3/d 149 GWh/d MW 218 3,751 GWh 37 MMm3/d 139 GWh/d MW 219 3,31 GWh 42 MMm3/d 14 GWh/d MW 22 3,13 GWh 44 MMm3/d 135 GWh/d 6.2 MW 221 3,13 GWh 45 MMm3/d 139 GWh/d MW 222 3,13 GWh 46 MMm3/d 141 GWh/d MW 223 3,13 GWh 46 MMm3/d 144 GWh/d MW 12 Table N 5 The table above shows also the power that it will need to supply the new demand that comes from gas market. It is forecast that Argentine Power Supply could provide these volumes. Average Annual rate of demand growth of power and gas of 4 %. For the following ten years the average annual rate of demand growth for both market is 4 % Diversification of Power Matrix. One of the main objectives is to reduce Greenhouse Gases Emissions. This reduction not only would happen because of the replacement of residential NG by electrical energy but also as a consequence of a policy of diversification of power matrix. The Renewable Energy Law established that in 216, 8% of the power matrix will have to be supplied by renewable sources. On the other hand, government has schedule projects of large hydraulic, nuclear and thermal power plants that were considered in this analysis. The evolution of electricity matrix would be the following one: 12 This transfer of consumption will be consider in electrical demand 15

16 Liquid Fuels, 16,2% 212 Argentine Power Matrix Coal, Imports, 2,1%,3% Renewable,,3% Hidraulic, 29,1% 223 Argentine Power Matrix Renewable, Coal, 1% 8% Hidraulic, 31% Natural Gas, 47,3% Nuclear, 4,7% Natural Gas, 56% Nuclear, 4% Figure N 15 Figure N 16 New electrical plants. With regards to new supply its project the following schedule, considering governments projects and privates ones: Evolution of Supply of Power New Supply per Year New Supply accumulated MW Figure N 17 The forecast supply will consider large hydraulic, nuclear and thermal power plants. It is also consider new renewable energy projects. The following graph shows how new supply would be able to satisfy new residential demand: Forecast of Power Supply and Demand MW Power Demand including new residential demand for heating Power Demand Installed Capacity Power Available Figure N 18 16

17 6. RESULTS: Considering to assumptions and policies proposed, Argentine power matrix would evolve towards the following scheme: Natural Gas Consuption MMm3/d Natural Gas Consuption MMm3/d Summer Winter Summer Winter Residential 2 76 Residential Industries Industries Thermals Plants 46 2 Thermals Plants 62 6 GNV 1 1 GNV 1 1 Total MMm3/d Total MMm3/d Power Generation (GWh-mes) 212 Summer Winter 223 Summer Winter Hidro Hidro Nuclear Nuclear Renewable Renewable Termic with NG Termic with NG Termic with fuels Termic with fuels Imports Imports GWh-mes GWh-mes Table N 6 As shown in the previous table, it is forecast to reduce residential gas consumption up to, releasing these gas to industry and thermal plants. So that it is supposed that industrial consumption will double actual demand and will have no restrictions in winter. On the other hand no fuels will be need to burn at thermal plants Power Generation (GWh-mes) As a consequence the expected 223 Power Matrix will generate 28 millions of tons eq. of CO 2, as is shown in the following table: 223 Argentine Power Matrix Greenhouse Gases Emissions 223 % GWh Tn eq. Of CO2 Hidro 31% Nuclear 4% Renewable 8% Termic with NG 56% Termica with fuels % Imports % Total 1% ,14 TN eq CO2/MWh Table N 7 17

18 This way the emissions of power matrix would be reduced from.38 ton eq. of CO 2 to.14 ton eq. of CO 2 /MWh. 7. CONCLUTIONS: Argentine NG imbalance increases every year and so it is necessary the escalation of LNG imports. So that the replacement of NG residential consumption by electricity will set free a high percentage of gas. As a consequence, the availability of supply to the Industry will increase strongly and the use of liquid fuels to generate will reduce to. The introduction of incentives to replace residential NG consumption by electricity will reduce NG market crisis and also the emissions of greenhouse gases. The reduction of greenhouse gases emissions will generate significant environmental benefits to the country. Despite the proposal is theoretical, it practical application could be carried out with serious policies. In the beginning users probably do not appreciate the benefits of these policies; however, the economic incentives will encourage families to replace NG consumption by electricity. They, indirectly, will be beneficiaries of the expected consequences for these policies. 18

19 REFERENCES: Montamat, Daniel Gustavo- Argentine Energy 27 (Spanish Language). Arias, Jorge Marcelo- LNG, tecnology and market - 26 (Spanish Language). Fundación Bariloche- Diagnostico, Prospectivas y lineamientos para definir Estrategias posibles ante el cambio climático (Spanish Language) energia3.mecon.gov.ar/ 19