26 represent roughly $400M of the country’s total investment in renewable electricity production. These bonds are for 8 years at 9.75% interest with semiannual payments to pay for two wind farms to generate 100 MW of renewable energy, which are typical loan size and interest rate for this type of project. Both of La Rioja’s bonds have been rated E1, the highest of four possible ratings, by S&P (S&P Global Ratings, 2017, 2018). However, green bonds are not perfect. Most investments from foreign entities have been in USD (Climate Bonds Initiative, 2019). This is a path Argentina has been down before, which has caused problems for the government due to currency instability. With the financial downturn in 2020, it has been reported that La Rioja has missed a coupon payment and intends to begin discussions to restructure the debt with creditors. In response, Argentina has been working hard to entice possibly wary investors with the passage of Green and Social Bond Guidelines (Argentine Republic, 2019). These guidelines create a protocol with the aim of developing strong sustainable finance in the banking sector. With almost all bonds issued being from local governments, it appears that the pattern of defaults will continue (Climate Bonds Initiative, 2019). Although many foreign banks have been actively investing in energy projects elsewhere, the use of highly secured green bonds hopefully will attract future FDI in Argentina renewable projects. With a large amount of renewable energy systems producers conducting deals in foreign currencies, Argentina’s inflation poses a significant risk to investment in renewable energy. With most of Argentina’s debt in USD (Nelson, 2020), the instability of the peso may make reasonable loans impossible to pay off. This is a macroeconomic problem that the country has been grappling with for some time. Between 2016 and November 2020, the value of the peso relative to the USD has been cut to an eighth, and the inflation rate was over 50% in 2019 (Statista, 2020), which may be the most significant barrier to renewable energy investment. That said, instruments such as FODER, RenovAr, and green bonds would make investment in green technology more accessible than in other sectors within Argentina, thereby investment in renewable energy can be a significant opportunity for much-needed economic stimulus. Conclusion Argentina shows great potential to turn a new page in its electricity generation portfolio, which will allow the country to make great strides in its environmental commitments. Argentina needs to make changes to reach its environmental goals, but it is well within Argentina’s ability. This is especially true given Argentina’s prime position to capitalize on renewable energy opportunities. Investing in renewable energy sources also will yield longterm success for the economy as a whole. While this direction is not without risk, as is taking on any major investment, it will significantly reduce GHG emissions, save government funds by reducing fossil fuel subsidies, and contribute to a much stronger economy. It is key for the government of Argentina to follow through on expanding RenovAr and more aggressively encourage FDI through mechanisms such as the green bond initiative. As a signatory to the Paris Agreement, Argentina has committed to important climate goals, goals that can be achieved in large part through an extensive development of renewable energy sources for electric generation. To be successful, now is the time to take significant action.
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