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Quick and dirty cash

Leaders from across the Americas are attending a summit this week in Los Angeles to discuss, among other things, how to build a sustainable future. One of the questions hanging over the meeting: Is there a place for oil and gas in that future?

Argentina, like many other middle-income nations sitting on large fossil fuel reserves, seems to hope so.

In recent years, the country has set out plans to greatly expand its renewable energy infrastructure. With China’s help, it recently built the largest solar power plant in South America. Right now, though, Argentina is desperate for cash. So, it’s taking advantage of something the world is ready to pay loads of money for: oil and gas.

That’s a consequence of two major world crises. The pandemic has left some countries deeply indebted, while the war in Ukraine has sent global oil and gas prices soaring. For Argentina, and many other Latin American countries, cashing in on the global demand for energy is an unexpected opportunity for a much-needed break.

Argentina’s oil production increased 14 percent in the first quarter of this year, the highest pace in more than a decade. Production of shale gas went up more than 60 percent in the same period.

Now, the country’s leaders want to speed up development of the Vaca Muerta project in Patagonia, one of the largest deposits of shale gas in the world.

Argentina has an older and bigger debt than most. But it’s also better positioned to exploit this moment because much of its output comes from shale projects, which can be scaled up quickly. Countries that have oil and gas reserves at sea, where they’re more expensive to extract, can’t easily make long-term plans based on recent price increases.

Still, Argentina isn’t the only country in the region seizing the moment.

The most striking example is Venezuela. Rich in oil reserves, the country has largely been cut off from big overseas markets by Western sanctions. But over the weekend came news that the United States had given a green light for two European companies to begin shipping small amounts of oil from Venezuela to Europe. (Venezuela wasn’t invited to the summit.)

Brazil and Guyana, having invested in deepwater oil and gas projects, are expanding production. And Peru is increasing its exports of liquid natural gas to Europe and is talking about tapping into oil fields in the Amazon rainforest.

This all comes against the backdrop of a clear warning from the International Energy Agency. Last year, the organization said there could be no new fossil fuel developments if the world is to limit global temperature rise to below 1.5 degrees Celsius by the end of the century. Beyond that threshold, the dangers of global warming — including worsening floods, droughts, wildfires and ecosystem collapse — grow considerably.

The moment is an awkward one for Latin American leaders, who want to show in Los Angeles that they’re taking climate change seriously. Indeed, the theme of the Summit of the Americas is “Building a Sustainable, Resilient and Equitable Future.”

I asked Ariel Kogan, an adviser to Argentina’s president on energy policy, if there was a contradiction between a sustainable future and pulling more fossil fuels out of the ground. He said Argentina contributed to less than 1 percent of the world’s emissions and couldn’t be asked to make tough choices when rich countries weren’t doing their part in the climate challenge.

“The economic reality of developed countries is not in agreement with this target,” he said. “There is no dilemma for Argentina. This is a problem for the world’s great powers.”

Argentina’s sweeping energy transition plan, Kogan said, had to be put on hold. Increasing the production of solar and wind energy, he said, “would mean importing this equipment, which the country doesn’t have resources to do.”

Argentina’s current situation is symbolic of how the pressure from climate activists to keep fossil fuels in the ground isn’t nearly as great as that imposed by the challenges to fully develop low and middle-income economies. Especially when money for green investments is lacking.

Daniel Dreizzen, a former secretary of energy planning in Argentina, said he couldn’t envision a future where countries like Argentina left their reserves untouched in the ground. The percentage of renewables in Argentina’s energy matrix is likely to grow, he said, but that won’t mean producing less fossil fuels in absolute terms.

“Everyone wants to change the system,” he said. “The problem is how fast and at what cost.”


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Thanks for reading. We’ll be back on Friday.

Somini Sengupta, Claire O’Neill and Douglas Alteen contributed to Climate Forward. You can see and share the website version here.

Reach us at climateforward@nytimes.com. We read every message, and reply to many!

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