Latin America and the Caribbean’s (great) opportunity for a greener future

Latin America and the Caribbean (LAC) region has emerged as a key player in the global energy scenario, driven by a unique combination of natural resources and a huge opportunity for sustainable development.

Mineral: Driving the energy transition

LAC countries hold a third or more of the world´s reserves of lithium, copper, and silver (Figure 1). The “Lithium Triangle” formed by Argentina, Chile, and Bolivia possesses vast lithium deposits crucial for battery storage in transportation and the power sector. Led by Chile, the region is also a major producer of copper, essential for expanding electrical grids.

Figure 1 – Share of Latin America and the Caribbean countries in global production and reserves of selected minerals, 2022. Source: IEA, 2023

The rising demand for these minerals is attracting substantial investments and international collaboration. However, mining activities in sensitive ecosystems or water-scarce regions require adherence to environmental, social, and governance (ESG) standards to ensure positive contributions to local communities.

Renewable Energies: Solar and Wind, great allies in the transition

While hydropower and biofuels already have an important role in the energy systems of the region, solar PV and wind energy resources offer abundant opportunities for expanding renewable energy and promoting green hydrogen production.

In the Southern region, Patagonia’s wind resources can reach capacity factors of 60%, while near the Cordillera de los Andes, solar PV can reach capacity factors exceeding 30%. In addition to reducing emissions and diversifying the energy mix, renewable energy represents an exceptional opportunity for regional economic development.

Hydrogen: Fueling a greener future

Green hydrogen from electrolysis is a strong bet in the region, mainly driven by the large availability of renewable energy, potentially leading to low production costs. Eight countries of the region have a hydrogen strategy (Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Panama, and Uruguay) and four countries are in the preparation phase (Bolivia, Paraguay, Perú and Trinidad and Tobago). Latin America’s green hydrogen is expected to grow significantly for local use and export to other regions.

Opportunities and challenges

In the upcoming years, the region will have a unique chance to establish a robust regional value chain, promoting sustainable industries and creating jobs. However, it must address the necessity for massive investments in energy infrastructure, secure international financing, and responsible management of mineral and water resources to avoid adverse environmental impacts.

Sustainable development in the region will be a gigantic challenge requiring collaboration among public, private, and academic sectors, along with international support. That is why we are looking forward to the 26th World Energy Congress in Rotterdam, from the 22^nd to the 25^th of April 2024, to discuss these issues, learn from global experiences, and identify potential collaborations. Join us at this global event to re-design energy for people and the planet!

Reference: IEA Latin America Outlook, 2023, IEA