World Energy Council Latin America & The Caribbean Network

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Latin America & The Caribbean Network

The Latin American regional network spans from Panama, Ecuador and Colombia in the North to Chile, Uruguay, and Argentina in the South, and includes further countries in central Latin America countries. The extensive network brings together the energy plus community in the region, including Ministers and government officials, CEOs, academics, energy experts, and young energy professionals to discuss and work for a sustainable energy future in the region.

Through events at regional and national level, the development of region-specific content and analysis, an extensive cross-border capacity building programme and collaboration with regional organizations such as the Development Bank of Latin America (CAF), Inter-American Development Bank (“IDB”) and Regional Energetic Integration Commission (CIER), national Member Committees work together to advance energy transition in Latin America and the Caribbean.

Regional action priorities that support the Council’s mission and humanising energy vision are agreed on an annual basis by national Member Committees in the framework of a Regional Action Plan. In 2021, Latin American members agreed to drive forward conversations on the future of hydrogen in the region, extend the reach of “We are all Energy” public awareness campaign across the region, and empower and connect young professionals to take an active role in the regional network.

Each month, the Latin American regional network meets to discuss matters of mutual interest, drive collective activities, and keep each other updated on relevant developments and events. In addition, throughout the year regionally targeted workshops are being organised to advance discussions in the context of our global insights and innovation tools.

Building on the 2020 interest of national Member Committees in the region and a Hydrogen Innovation Forum conducted, members in the region took forward the conversation on clean hydrogen as a promising solution to decarbonise hard to abate sectors such as industry and mobility while providing a seasonal storage solution. Key stakeholders engaged in discussions focussed on demand drivers and economics of hydrogen production and use as well as value chain developments, policy enablers and bottlenecks.

Initiated by the national Member Committee in Chile and the Chilean Agency of Energy Sustainability the “We are all Energy” campaign invites citizens to reflect on how energy, in all its forms, impacts people's life. Through a series of conversations supported by a social media campaign, “We are all Energy” raises public awareness about the role of energy as a key enabler to social and economic development, and the importance of advancing energy transition that leaves no one behind – now and for future generations. The initiative was extended to Argentina and Colombia who shared their local experiences and reflections around humanising energy transition.

Capacity building of professionals in the region has been a priority for national Member Committees for many years. World Energy Academy, a format initiated by the national Member Committee in Argentina (CACME) in 2014, provides professionals from different backgrounds with the tools to understand, assess and inform decisions, and exercise responsible leadership on energy issues. The World Energy Academy currently runs in Argentina, Bolivia, and Colombia.

National Member Committees across the region recognise the importance of empowering young professionals in the region to become actively engaged in and drive regional action priorities. Based on local vision and needs, Future Energy Leaders’ get involved through dedicated national programmes – in Panama, Chile, Argentina, and Uruguay – and / or in cross-border activities. At the same time, they have opportunity to network and interact with their peers and senior energy leaders.

Energy in Latin America and the Caribbean

Latin America & The Caribbean Network, issues monitor, critical uncertainties and action priorities

REGIONAL OVERVIEW & CONTEXT

Due to a high degree of political uncertainty caused by sharp changes in the direction of government, exemplified by recent elections in Brazil or Argentina, a greater sense of overall uncertainty and perceived inaction prevails. This climate of uncertainty is mirrored in the critical challenges confronting the Latin America and the Caribbean region, encompassing climate adaptation, commodity price volatility, stakeholder coordination and populism. This marks a dramatic shift from the previous report, where economic growth was the primary concern. While domestic and global growth also remains uncertain, there are issues in the action domain, notably international collaboration, workforce development and accessibility, albeit of lesser perceived impact on energy transitions. This contrasts with the findings of the previous report, where none of these issues were identified as action priorities, indicating a shift in leadership attention. However, despite the undeniable impact of transmission grids on the success of energy transitions, they do not feature as action priorities in the region. Moving forward, the priority for the region is to maintain momentum towards actionable solutions.

LATIN AMERICA AND THE CARIBBEAN REGIONAL DEEP DIVE

Major regional changes

The 2024 World Energy Issues Monitor reveals significant shifts in priorities and uncertainties for the Latin America and Caribbean (LAC) region. While "Economic Growth" was a primary concern in 2022, by 2024, the focus has shifted towards "Climate Adaptation," demanding increased leadership attention. Across the region, the pressing need for climate resilience and adaptation is increasingly apparent, particularly as disadvantaged communities disproportionately suffer from the harsh impacts of climate change.

A key aspect of this challenge is the food-energy-water nexus, which underscores the need to balance Energy Trilemma of energy security, equity, and environmental sustainability. This balancing act is especially critical in areas like local agricultural production and water resource management. The relevance of this challenge is seen through the region’s status as the world's largest net exporter of agricultural products, with Brazil alone being the world’s third largest exporter of agricultural products behind the European Union (EU) and the United States. In response, Brazil is leveraging advanced technology to address land use and carbon footprint issues related to biofuels. The country is innovating through second-generation ethanol (E2G), produced from plant residues like sugarcane straw and bagasse. This biofuel has a carbon footprint up to 80% lower than fossil fuels, making it a cleaner and more sustainable fuel option.

Accelerating regional trends over the last 5 years

Over the past 5 years, there has been a notable acceleration in the integration of green hydrogen within LAC economies. Many countries in the region have already defined or are in the process of developing a Hydrogen Strategy, making substantial investments and forming strong alliances to bridge private and public sectors, as well as national and international funding sources, to support its development.

One key characteristic of the LAC region is its heterogeneity in terms of economic development, energy mixes, natural resources, and exposure to the effects of climate change. A significant portion of the region relies on hydrocarbon imports, which impacts energy security, particularly geopolitical disruptions. Developing and increasing the contribution of diverse and domestic renewable energies can enhance the region’s energy security. As is the case in other parts of the world, the adequacy, expansion, and reliability of transmission grids is considered an action priority by regional energy leaders.

Integrating people and communities in the energy transition

Energy equity remains a challenge for the Latin America and the Caribbean, with approximately 3% the population lacking access to electricity and 15% lacking access to clean cooking fuels or facilities. Efforts to expand access to energy, such as the massification of the natural gas distribution system in countries like Peru, and the enhancement of electrical transmission and distribution networks across the region, are underway. However, it is crucial that these investments are integrated with climate action planning to ensure the reliability of supply.

While progress has been made, there is a clear need for increased leadership attention in policy and regulation towards climate change resilience. For instance, the implementation of distributed dams can serve multiple purposes, including buffering increased water cycles, generating electricity, and mitigating floods. Furthermore, it is essential to integrate the societal needs of local communities into decision-making processes. This can be achieved through the development of tools for gathering and sharing information related to climate adaptation, similar to Trinidad and Tobago’s Climate Adaptation and Resilience Portal (CARP). Similarly, IDB Invest, part of the Inter-American Development Bank Group, uses an Impact Management Framework and a Corporate Results Framework to align financial strategies with impact assessments throughout project lifecycles. This approach highlights the private sector’s contribution to addressing climate change, along with promoting gender equality and diversity.

Stakeholder coordination and participatory climate action are vital not only to ensure that citizens’ perspectives are incorporated into policies, but also to make policies and programmes more sustainable, actionable, and effective over the long-term. Addressing citizen’s diverse resources and resilience needs can help achieving a just transition thereby co-creating a sustainable future that is fair and inclusive of the region’s diversity.

A SNAPSHOT OF 2024 RESULTS

Transmission for transition

Many challenges faced by the region can be addressed through a comprehensive strategy that includes diverse, resilient, reliable, and distributed energy generation. Key to this strategy is leveraging local renewable resources and developing energy storage solutions. This approach is important given the region's vulnerability to extreme weather events like high temperatures and droughts, which stress the energy systems. This is particularly significant as 45% the region's electricity consumption relies on hydropower.

In addition, regulatory efforts are intensifying to establish frameworks expanding and modernising electrical grids, incentivising energy storage adoption, and fostering collaboration among key stakeholders. Currently, interconnections exist between several countries, including Brazil and Uruguay, Brazil and Argentina, Argentina and Uruguay, Argentina and Chile, Argentina and Paraguay, Paraguay and Brazil, Peru and Ecuador, Ecuador and Colombia, Colombia and Venezuela and Venezuela and Brazil. In June 2023, a new transmission line interconnecting Argentina and Bolivia was inaugurated, with studies for interconnections involving Bolivia, Chile, Peru, Colombia and Panama underway.

A complex policy environment

“Populism” and “Commodity Prices” are positioned on the LAC Energy Issues map within the realm of high uncertainty. The regional energy conversation may shift with the upcoming 2024 general elections in many countries in the region. Given that many nations in the region are classified as developing, the energy transition presents both challenges and opportunities.

The region boasts vast reservoirs of resources of critical minerals like Lithium and Copper, as well as renewable energies such as solar and wind power. These will be key for climate mitigation worldwide. However, government strategies must set out incentives, regulations and/or programmes that can enable the development of clean energies and local industry, whilst maintaining national competitiveness and responding to the needs of local communities.

In this context, raising awareness about demand management solutions, including energy efficiency and responsible energy consumption, is critical. Initiatives such as Barbados’ Public Sector Smart Energy Programme exemplify effective strategies for promoting sustainable energy practices and driving positive change across the region.

Furthermore, strategies are required to address short-, medium- and long-term energy transition objectives. These strategies should encompass various resources such as natural gas, renewables, energy storage, hydrogen, and critical minerals. However, challenges may arise from differing political standpoints and governments across countries, potentially impacting cooperation initiatives.

Climate risk and resilience

Latin America and the Caribbean is vulnerable to adverse climate conditions, with consequences for both the energy sector and the economy. Some examples of the impact of climate change underscore the need for climate adaptation and resilience measures. For instance, Brazil faced severe drought in 2021, resulting in reduced hydropower generation and increased energy prices. Hurricanes in the Caribbean disrupted power supply, demonstrating the need for resilient infrastructure investments.

A drier climate can have detrimental effects on hydro and fossil power plants, as well as critical mineral extraction, due to the requirement for water in their processes. Droughts also threaten bioenergy production by impacting crop yields. Increasing temperatures, particularly in Brazil, northern Chile and southern Peru may lower the efficiency of renewable and thermal power plants. Rising temperatures will also boost demand for cooling, straining electricity grids.

In response to climate challenges, the Panama Canal Authority is making strides toward carbon neutrality by the end of the decade, capitalizing on its role in reducing global CO2 emissions by providing a shorter shipping route. The canal's initiatives include the adoption of electric and alternative fuel vehicles, a transition to renewable energy sources such as photovoltaic and hydraulic power, and the enhancement of operational efficiencies through water conservation and transit optimisation. Supporting these endeavors, the Canal utilizes tools like the Emissions Calculator and engages in both national and international environmental initiatives, including Panama's "50 First Carbon-Neutral Organisations" and the International Maritime Organisation (IMO) 2020 regulation. These efforts are aimed at significantly reducing the Canal's carbon footprint and advancing sustainable practices within the global shipping industry.

FINAL CONSIDERATIONS

Latin America and the Caribbean's energy landscape is evolving, with climate adaptation now a top priority alongside economic growth. This shift highlights the need for resilient infrastructure and sustainable energy systems, supported by equitable financing and robust policies. Over the past five years, there has been significant progress in integrating green hydrogen, reflecting a broader commitment to renewable energy and climate action. However, challenges remain, including the region's diverse economic development and vulnerability to climate change. To address these challenges, proactive measures such as stakeholder engagement, transformative policies, and resilient infrastructure investments are crucial for achieving a sustainable energy future.

CONVERSATION STARTERS FROM THE 2024 WORLD ENERGY ISSUES MONITOR

What are the specific challenges anticipated in the regional energy context in the year ahead, considering factors such as political changes, energy equity, climate adaptation, fuel prices, infrastructure planning and critical minerals?
What impacts on energy security are being observed due to climate change? How has the policy environment either supported or hindered energy security, and what emerging opportunities exist? What climate adaptation measures should be implemented, and how do these measures relate to the energy-water-food nexus?
How can efforts to promote energy equity be expanded, and how does energy equity intersect with infrastructure action planning, affordability and climate mitigation?
Why is agility essential in advancing permitting and financing for projects aimed at advancing energy transitions? How do countries manage the complex coordination and collaboration of multiple stakeholders with diverse interests?
How is the capital cost affecting affordability and domestic growth in the energy sector? What are the implications of this for the energy industry?

ACKNOWLEDGEMENTS

Future Energy Leaders

Sofia Euthymiou, Integration Lead, Shell

Rocío Salles, Master Student, Polytechnic University of Cartagena

Mariela Colombo, Senior Consultant, Calden Consultoría

Julian Brathwaite, Chemical Engineer, Trinidad and Tobago Ministry of Energy & Energy Industries

Pablo Campos, Projects Control Manager, HIF Global

Andrea Torres, Energy and Electric Studies Analyst, Ecuador Energy and Natural Resources Regulatory Agency

Regional Chair

Claudio Seebach, Chair, Latin America and the Caribbean, World Energy Council

Project Management

World Energy Council