{"id":146180,"date":"2025-11-21T23:41:11","date_gmt":"2025-11-21T23:41:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/146180\/"},"modified":"2025-11-21T23:41:11","modified_gmt":"2025-11-21T23:41:11","slug":"latin-americas-clean-energy-moment","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/146180\/","title":{"rendered":"Latin America\u2019s Clean Energy Moment"},"content":{"rendered":"

Latin America has all the necessary ingredients for a successful clean energy transition, but can it pull it off? The region has enormous clean energy production potential, and already sources an impressive 70% of its electricity<\/a> from renewables. However, the necessary infrastructural and policy supports to ensure a secure, sustainable, and just transition are lagging far behind.\u00a0<\/p>\n

A new white paper from the World Economic Forum, Energy Transition Readiness: Latin America and the Caribbean<\/a>, finds that \u201cwhile the region has some of the most favourable structural conditions worldwide \u2013 abundant renewables, critical mineral wealth and relatively low fossil fuel dependence \u2013 progress in transition readiness has not kept pace.\u201d The World Economic Forum report also notes that while many other developing regions have reported major progress in this regard, Latin America and the Caribbean\u2019s readiness levels have stagnated over the past decade.<\/p>\n

There are a number of reasons for this inertia, but perhaps the most significant hurdle for the region\u2019s lack of transition readiness is a persistent under-investment in infrastructure. Latin America\u2019s power grids are insufficient and unfit for the region\u2019s growing and evolving energy needs. Energy losses through transmission and distribution are above the global average (13.5 percent versus 10.2 percent).\u00a0 Moreover, the World Economic Forum reports<\/a> that \u201cageing grids and limited interconnections restrict the integration of renewables.\u201d<\/p>\n

The region is also beset by gaps in clean energy investment, innovation, and human capital. A lack of funding has hindered research and development progress and capacities across Latin America and the Caribbean, and served to disincentivize the growth of a skilled workforce. Altogether, the 33 countries that make up the region contributed just 4 percent of the world\u2019s global transition capital in 2025, at a total of $70 billion. This falls far short of the $150 billion that the region needs to contribute annually by 2030 in order to be transition-ready.<\/p>\n

\u201cStructural challenges \u2013 from infrastructure bottlenecks to fragmented policies, limited innovation and weak financing \u2013 highlight the critical areas where focused reform and investment can unlock the region\u2019s full potential,\u201d writes the World Economic Forum.<\/p>\n

And that potential is enormous. The region has all the raw materials to become a clean energy powerhouse, and foreign investors have taken notice. China\u2019s presence<\/a> in the region\u2019s markets has grown immensely in recent years, and supply chains and trade relations with Beijing are increasingly central to Latin American economies. Around 90% of all installed wind and solar technologies<\/a> in Latin America are produced by Chinese companies. China has inked bilateral trade pacts with Chile, Costa Rica, Ecuador, Nicaragua, and Peru, and its Belt and Road Initiative has invested in all manner of infrastructure projects in 21 Latin American countries since 2013.<\/p>\n

Latin America\u2019s trade patterns leave it exposed to critical economic vulnerabilities, especially when it comes to energy trade. Many nations in the region are what is known as \u201cdual energy-dependent\u201d, meaning that they both export and import fossil fuels, leaving them exposed to price volatility on both ends. Moreover, increasing economic and financial reliance on just one country \u2013 China \u2013 results in critical geopolitical risks.<\/p>\n

Foreign companies are also quickly turning Latin America into a global hub for data center construction<\/a>, transforming regional economies and energy systems on the crest of the global AI boom. The data center market in Latin America is projected to double in valuation by the end of the decade. Brazil, Mexico, and Chile are leading this growth trend, and other countries like Colombia, Peru, Costa Rica, and Panama are emerging as new investment centers. This development is allowing the U.S. and allies to nearshore their supply chains while also offshoring the resource needs, grid stress, and public backlash<\/a> associated with data center development.\u00a0<\/p>\n

This boom will place even more stress on the region\u2019s already beleaguered power grids and create a new urgency for shoring up transition readiness. In order to avoid catastrophic grid failures, rolling blackouts, and growing reliance on energy imports, the World Economic Forum argues that meeting goals for energy security and transition readiness requires \u201caction across four pillars: stronger policy frameworks, deeper regional integration, scaled financing partnerships, and greater investment in innovation and skills.\u201d<\/p>\n

By Haley Zaremba for Oilprice.com<\/p>\n

More Top Reads From Oilprice.com<\/p>\n

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