Plotting a path to a fair energy transition in Latin America

The clean energy transition in Latin America and the Caribbean must include "a reconfiguration" of interests and powers to minimize potential costs and maximize benefits, a new report warns. 

The Energías Renovadas report, published by Latin American development bank CAF, said understanding political and economic challenges specific to each country was key to advancing decarbonization policies. 

It cited the impact of carbon taxes on areas where renewable sources may not be available, a scenario that could generate "energy impoverishment" in the short term. 

"The energy transition implies costs and benefits that are not evenly distributed among the various interest groups," the document says. 

It added that the prospect of stranded assets for economies dependent on fossil fuels could lead to losses that are distributed unequally within countries and regions. 

Such an outcome would be aggravated for countries that have lower potential for non-conventional renewable power generation and lack critical minerals, according to CAF. 

The entity also cited challenges related to surging energy demand and balancing the need to increase supply of renewable power with necessary investments in fossil fuels that guarantee energy security. 

"Covering the growing energy demand without compromising the global climate agenda necessarily requires significant investment flows for the development of technology that allows the expansion of renewable energy sources," it says.

"The policy agenda described also makes it possible to alleviate these challenges by seeking to improve the trade-offs between emissions and growth, making the most of the opportunities that the energy transition brings to the region, and placing citizen protection as a high priority."

The full report, in Spanish, can be seen here.