Latin America's energy transition: Complex and Uncertain

In the first week of COP28 in Dubai, crucial declarations flooded in. More than 100 nations, including Brazil, Colombia, Argentina and Mexico, committed to tripling renewable energy capacity by 2030—a bold proposition championed by COP28’s president, Sultan Al Jaber.

The energy discourse is now shifting to determining which nations advocate for the decisive terminology: »phasing out« or »phasing down« fossil fuels. These seemingly nuanced terms sow discord, with the former implying a complete cessation of fossil fuel use, while the latter signifies a gradual reduction without a definitive endpoint.

However, the implications of these decisions for Latin America and the Caribbean are not as straightforward. While it’s tempting to echo Fatih Birol, Executive Director of the IEA, who asserted at the launch of the Latin America Energy Outlook 2023 report that »one of the regions that can achieve this target is Latin America and the Caribbean«, the reality is far more intricate.

According to the IEA report, the region is starting in a favourable position: fossil fuels constitute only 66 per cent of the energy mix, below the global average of 80 per cent. Additionally, 60 per cent of electricity generation stems from renewables. There is still room for improvement, however. The report indicates that, with existing policies, renewables will increase from 60 per cent to 66 per cent by 2030 and could reach 80 per cent by 2050. Yet, if the climate pledges announced by the countries materialize, these figures could soar to 70 per cent and 90 per cent, respectively.

Other reports, including one released this year by Global Energy Monitor (GEM), suggest that when you tally up the projects announced by companies, including those in pre-construction or actively under construction, the region’s large-scale wind and solar capacity is poised to surge by more than 460 per cent by 2030.

»If you take into account all these renewable GW, the region comes second globally, just behind China«, said Gregor Clark, Project Manager for GEM’s Latin America Energy Portal.

The region has another advantage: it harbours essential minerals that are crucial for constructing renewable energies. José Antonio Vega, a member of the Stockholm Environment Institute and co-author of the Production Gap Report, underscores that »Mexico, Chile and Peru produce 40 per cent of copper, while Chile generates 25 per cent of lithium, followed by Argentina (6 per cent) and Brazil (1.5 per cent). This is why it is important to connect the renewable energy industry with the critical minerals industry, as they are not exempt from corruption.«

It is here that the picture becomes more complex. Extensive solar and wind energy initiatives in Latin America have triggered socio-environmental conflicts, primarily stemming from insufficient community involvement. To illustrate, in La Guajira, Colombia, where 31 wind projects are slated to contribute 5 gigawatts, concerns have arisen over the displacement of indigenous Wayuu communities and the unequal distribution of benefits. Similarly, in the state of Rio Grande do Norte, Brazil, home to over 240 of the country’s 900 plus solar farms, the evolving landscape has not translated into improved living conditions for the local populace.

As authors Rosa Lehmann and Anne Tittor point out in an article published in the Journal of Environmental Policy & Planning, social groups in Latin America are facing a triple inequity due to the decarbonization policy: »They are negatively affected by climate change although, from a global and historical perspective, they have not contributed much to it, and now face injustices related to the mitigation of climate change.«

But the dilemma does not stop there. The energy transition in Latin America is also falling short because there is no plan for how to leave fossil fuels behind. »We don't need energy addition, we need an energy transition,« says Vega.

Mexico and Brazil have invested in new engines for their oil companies, Pemex and Petrobras. Brazil even plans to increase oil and gas production by 124 per cent by 2032. And although some countries, including Colombia, have joined initiatives such as the Fossil Fuel Non-Proliferation Treaty, the signs are still confusing. »There are three gas-fired thermoelectric projects in force, which would come into operation between 2025 and 2026,« Vega noted.

In order to be successful, the idea of tripling renewable energies in Latin America and the Caribbean, must ensure justice, participation and adhere to the principle of leaving no one behind.