EU Strikes Dirty LNG Agreement with Argentina, Fails to Navigate Clean Energy Course with Crucial Mercosur Allies

The European Union and Latin America are deepening their economic ties, with a focus on energy and sustainability. The booming extraction in Vaca Muerta, Argentina, and the combined imports and exports between Europe and Latin America, worth over 300 billion euros per year, are key factors driving this partnership.

The European Commission recognizes the need to strengthen partnerships with green energy-rich nations like Argentina, Brazil, and Chile, to avert a growing dependency on Chinese supplies. As part of this effort, the EU has pledged a €45 billion investment to launch projects related to new technologies in Latin American and Caribbean nations.

The EU-Argentina MoU, signed recently, calls for cooperation on the use of hydrogen and its derivatives in industrial applications, energy storage, and transport. The agreement also includes provisions for the EU to help Argentina tackle methane emissions, particularly widespread venting and flaring.

The European Commission has proposed an additional protocol to clarify the obligations of both sides in terms of environmental compliance, including compliance with the Paris Agreement. However, Mercosur has not been welcoming to this idea. The French Parliament, on the other hand, has passed a resolution calling for the negotiations to be reopened and for so-called 'mirror clauses' to be added, which would subject imports to Europe from Mercosur countries to the same environmental and climate standards as domestic products.

Spanish Prime Minister Pedro Sánchez has emphasized the importance of completing three agreements: one with Chile, one with Mexico, and the Mercosur agreement. Spain has pledged to mobilize €9.4 billion over the next few years through different public investment instruments, in addition to another €10 billion from other European institutions.

The goal of the European Union is to facilitate trade deals between the private and public sectors of both regions. This was evident at the CELAC conference in July 2023, where the EU agreed on a comprehensive energy and LNG agreement with Argentina, Brazil, Chile, and Colombia. A similar agreement on materials was already agreed between the EU and Argentina in June.

Spain's prime minister, Pedro Sánchez, opened a key session of the European Union's meeting with the Community of Latin American and Caribbean States (CELAC). During this session, the EU managed to agree on a sweeping bilateral energy and LNG deal with Argentina, under which Argentina will facilitate a stable LNG supply to the EU in exchange for cooperation on green energy technology.

Negotiations for the Mercosur agreement date back to 2000, and some agreements were already signed in 2019. However, the discussions have been complicated by disagreements over environmental issues. French President Emmanuel Macron has stated that he will not approve any free trade agreement with Mercosur unless it contains commitments on sustainability and deforestation.

Brazilian President Luiz Inacio Lula da Silva has been more reticent to enter into new international guarantees or promises on environmental issues, accusing Macron of using environmental concerns as a mask for 'protectionism' in favor of French domestic agriculture.

It is important to note that the views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.

In conclusion, the European Union and Latin America are working together to strengthen their economic ties, with a focus on energy and sustainability. While there are challenges to overcome, particularly in terms of environmental compliance, the potential benefits of these partnerships are significant.

EU Strikes Dirty LNG Agreement with Argentina, Fails to Navigate Clean Energy Course with Crucial Mercosur Allies