The Relevance of the Energy Transition in Latin America
We help deliver the energy transition by fostering collaboration and sustainable solutions for a cleaner energy future.
The Relevance of the Energy Transition in Latin America
We help deliver the energy transition by fostering collaboration and sustainable solutions for a cleaner energy future.
The Energy Transition & Latin America: A two way street
Why the Energy Transition and Why Latin America?
Latin America is uniquely positioned to play a pivotal role in driving the global energy transition due to its abundant renewable resources, mineral wealth, and clean electricity mix. This combination not only allows the region to meet its own energy needs sustainably but also provides the opportunity to lead by example in decarbonizing the global energy system.
Latin America's Role in the Global Energy Transition
"The region's renewable resources and energy infrastructure offer significant opportunities for both domestic transformation and global impact. Latin America and the Caribbean already has one of the cleanest electricity sectors in the world, with 60% of its electricity generated from renewable sources—twice the global average. Hydropower is a dominant force, but the region also has some of the world's best resources for wind and solar energy, particularly in Brazil, Mexico, Chile, and Argentina. Moreover, Latin America is a major producer of bioenergy and a leading exporter of biofuels, making it a key player in the global energy transition. Between 2015 and 2022, the region increased its renewable energy capacity by 51%, with 64% of its electricity generation coming from renewable sources by 2022. While the region has made remarkable progress, further investments and transformations are necessary to achieve net-zero emissions by 2050.
The Region's Mineral Wealth: Key to Clean Energy Technologies
Beyond its renewable energy potential, Latin America holds a critical advantage in the global supply chain for clean energy technologies. The region contains approximately half of the global lithium reserves and over a third of the world's copper and silver reserves. These minerals are essential for the production of batteries and electric vehicles, both of which are central to the shift towards a low-carbon economy. Thanks to its clean electricity supply, Latin America can also sustainably mine and process these critical materials, positioning itself as a global leader not only in the production of renewable energy but also in the manufacturing of clean energy technologies. Furthermore, the region has the potential to become a key exporter of low-cost, low-emission hydrogen, contributing to global energy security and helping decarbonize heavy industry and freight transport both within and outside the region.
The Energy Transition's Impact on Latin America
While Latin America is well-positioned, it faces challenges in fully realizing its potential. Despite its clean energy leadership, the region must address policy consistency and investment gaps to achieve its climate goals. Without strategic investments in energy efficiency, emerging technologies like green hydrogen, and energy storage systems, Latin America will struggle to meet its net-zero emissions target by 2050. The transition to renewable energy also requires a significant shift in energy infrastructure. The rapid growth of intermittent renewables, such as solar and wind, has put pressure on the electricity grid, demanding greater flexibility to balance generation with demand in real-time. Additionally, the region needs to invest in resilient infrastructure to withstand extreme weather events, a reality made more pressing by the impacts of climate change.
The Need for Investment and Stable Regulatory Frameworks
To meet these challenges, investment in clean energy technologies must increase significantly. According to current projections, financing for clean energy projects needs to double by 2030 to USD 150 billion annually and increase fivefold by 2050. The ratio of investment in clean sources to unabated fossil fuels needs to shift from 1:1 today to 4:1 by the 2030s. Furthermore, stable regulatory frameworks are critical for attracting long-term investment in the region's energy infrastructure. Clear policies are needed to incentivize the development of energy storage technologies, define green hydrogen frameworks, and promote energy efficiency measures. Ensuring that these regulatory structures are in place will help unlock private sector financing and make the transition more economically viable.
A Just Energy Transition
Equally important is the commitment to a just energy transition that ensures the costs and benefits of decarbonization are shared equitably. According to recent reports, 17 million people in Latin America still lack access to electricity, and 74 million are without access to clean cooking fuels. To avoid leaving these vulnerable populations behind, the region must focus on universal access to modern energy at affordable prices as a cornerstone of its transition strategy. Additionally, a just energy transition must strengthen climate resilience and promote inclusive growth, ensuring that the benefits of clean energy technologies reach all sectors of society. This people-centered approach is essential for ensuring that the region's energy transformation fosters social and economic development while mitigating the impacts of climate change.
Conclusion: Latin America’s Critical Role in the Global Energy Economy
As Fatih Birol, Executive Director of the International Energy Agency (IEA), has stated, "Latin America and the Caribbean can play an outsize role in the new global energy economy. With incredible natural resources and a longstanding commitment to renewables, countries in the region already have a head start on secure and sustainable transitions to clean energy. Leaning into these transitions would ignite growth in local economies – and put the world's energy system on a surer footing." Latin America has both the natural resources and the clean energy leadership needed to play a central role in the global energy transition. However, the region must address several key challenges—policy consistency, investment gaps, and technological innovation—to fully capitalize on its potential. By doing so, Latin America can not only drive domestic growth but also contribute to global climate action, positioning itself as a key player in the low-carbon future.
Driving Innovation in Energy Transition
