Latin America: Challenges and Opportunities in the Sustainable Energy Transition

Latin America finds itself at a fundamental crossroads on its path toward a more sustainable energy future. The region has immense potential to generate electricity from renewable sources, providing it with the opportunity to lead the global energy transition. However, this progress is hindered by the persistence of dependence on fossil fuels, particularly natural gas, which is mistakenly regarded as a “clean” and “transitional” alternative. This concept, which has deeply resonated in the collective imagination, is undoubtedly one of the main obstacles to decarbonization in Latin America. Natural gas, while emitting less carbon dioxide (CO2) than other fossil fuels like coal and oil, is not a magical solution. It is crucial to demystify this idea, as the production and consumption of gas are responsible for significant methane emissions, a greenhouse gas 28 times more potent than CO2. This means that, although it may seem like a cleaner option, gas contributes significantly to global warming, contradicting the climate goals that many countries have committed to achieving. According to a recent report from the United Nations Environment Programme (UNEP), an energy transition focused on renewable energies could reduce greenhouse gas emissions by 80% by 2050. In comparison, a transition that includes natural gas as a central pillar would only achieve a 20% reduction. This discrepancy is alarming and highlights the urgent need to reevaluate investments being made in gas infrastructure, especially in countries like Brazil, Mexico, and Argentina. An emblematic example of this issue is the Vaca Muerta project in Argentina, which seeks to exploit unconventional gas and oil reserves. Such initiatives require years of development and often decades to generate a financial return. However, in a world moving toward decarbonization, these investments may end up being stranded assets. The urgency of the climate situation demands that we direct our resources toward the development of renewable energies rather than perpetuating dependence on fossil fuels. The challenges are even more complex in countries like Trinidad and Tobago, where oil and gas account for 40% of GDP and 80% of exports. The energy transition may seem like a threat to economic stability in these contexts. Additionally, fossil fuel subsidy policies, such as the recent 70% subsidy for gas connections in Colombia, can hinder efforts for cleaner and more accessible energy. On the other hand, renewable energies not only represent an opportunity to decarbonize the economy but can also contribute to job creation and the democratization of energy access. According to UNEP, developing renewable energies could generate around 1.3 million new jobs in the region by 2030, compared to just 14,000 jobs that would be created with a gas-based energy infrastructure. In a context where unemployment exceeds 7%, this is an opportunity we cannot afford to miss. In light of this scenario, governments, financial institutions, and the private sector have a fundamental role to play. It is imperative that they commit to accelerating the adoption of renewable energies and gradually phasing out natural gas. A coordinated effort is required to promote policies that prioritize investment in clean and sustainable technologies, along with the creation of regulatory frameworks that facilitate this transition. The energy transition is a challenge, but also an opportunity. Looking toward the future, we can find inspiration in recent events, such as the Paris Olympic Games, where collective effort and commitment to excellence led to impressive athletic achievements. Similarly, it is possible for Latin America to align with a high standard for its energy transition, demanding a fair, rapid, and effective evolution toward 100% renewable electrical systems. It is time to act with determination and clarity of vision. History has taught us that challenges can also be catalysts for change, and the energy transition is no exception. The opportunity to make Latin America a leader in renewable energies is within reach, as long as bold decisions are made and a firm step is taken toward sustainability.