Latin America is well-placed as a driving force and influential role in the global energy sector thanks to its endowment of energy and mineral resources and clean energy history, according to a new report from the International Energy Agency (IEA).
The report, Latin America Energy Outlook, is a comprehensive analysis of the region — including the Caribbean — and covers a full range of fuels and energy technologies across 33 countries. The region’s wealth of high-quality renewables, oil and gas, as well as critical minerals, position these countries as potential leaders in global energy security.
“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,” IEA Executive Director Fatih Birol said in a statement. “Our report shows that supportive policy making and international cooperation are essential to ensure the region can take full advantage of its remarkable energy potential.”
Net Zero Emissions Targets
Overall, countries in Latin America and the Caribbean hold about 15% of the global oil and natural gas resources, and it is also a key region for the production of many key minerals used in clean energy technologies.
Around half of global lithium reserves, plus more than a third of copper and silver reserves are located here. Lithium in particular is an increasingly important material for the electric vehicle market and EV batteries, as well as other electronics. The region also has a strong clean electricity supply that enables sustainable mining and processing of the materials, the report stated.
Despite being such a resource-rich region, there are policy gaps identified in the report when it comes to this region. For example, 16 of the 33 countries examined have pledged to reach net-zero emissions by mid-century or earlier. Even with those pledges, the region is burning fossil fuels to meet its energy needs, and its clean energy progress is limited.
If the pledges were actually met, renewables could meet the region’s energy needs this decade.
Boosting renewables would also drive the hydrogen market, which could help decarbonize heavy industry and freight transport domestically and internationally, the report said. The push to renewables could also double revenues from production of critical minerals to $200 billion, which exceeds revenues from fossil fuels. Namely, there is a 40% emissions gap between what is projected in the region based on today’s policies versus the pledges already announced, which could be filled by renewables.
The report outlined four key actions the region should take to reduce carbon emissions:
- Ramp up the adoption of renewable energy
- Advance the electrification of industry and transport
- Drive energy efficiency to moderate demand growth
- Boost access to clean cooking solutions
To meet the net-zero goals, ramping up investment will be a top factor. In fact, the report predicted financing for clean energy projects needs to double by 2030 to $150 billion and rise fivefold by 2050. That level of investment would boost the ratio of investment in clean sources to fossil fuels from around 1 to 1 today to 4 to 1 in the 2030s.
The transition will also require bringing clean energy to people in the region, where currently 17 million people lack access to electricity and 74 million lack access to clean cooking supplies.
Beyond boosting renewable energy and expanding clean energy throughout the region, reducing methane emissions from oil and gas production is critical in the region. Major producers in the region can reduce emissions by nearly 80% at low cost, while around 40% can reduce with no net costs. The move would support the Global Methane Pledge, which asks signatories to reduce global methane emissions by at least 30% from 2020 levels by 2030 through collective action.
See the full report here.