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Latin America is poised to play an increasingly important role in the global transition to cleaner energy sources, the International Energy Agency (IEA) said on Wednesday in its first-ever energy outlook on the region.
Latin America and the Caribbean region already lead in the energy transition, with hydropower, solar, wind, and biofuels having a large share in the energy mix in many of the 33 countries reviewed in the report.
Brazil, Mexico, Chile, and Argentina have high-quality solar and wind resources, while Chile, Peru, and Argentina are producing copper or lithium, key minerals for the energy transition, the IEA notes. Paraguay and Costa Rica are world leaders in clean electricity as nearly all of their power supply comes from renewable energy sources.
Fossil fuels account for around two-thirds of Latin America’s energy mix, lower than the 80% global average, thanks to the 60% share of renewables in electricity generation, the Paris-based agency said. Hydropower alone accounts for 45% of electricity supply in Latin America.
Under the current policies, the share of renewables in Latin America’s electricity supply is expected to rise from just over 60% today to two-thirds in 2030 and 80% in 2050, the IEA says.
The potential to produce low-emission fuels and significant resources of critical minerals make Latin America one of the key drivers of the global energy transition despite the fact that the region today represents only 8% of the global population and 7% of the global economy.
“With incredible natural resources and a longstanding commitment to renewables, countries in the region already have a head start on secure and sustainable transitions to clean energy,” said IEA Executive Director Fatih Birol.
“Leaning into these transitions would ignite growth in local economies – and put the world’s energy system on a surer footing.”
To fulfill the announced pledges of clean energy and emission reduction goals, financing for Latin America’s renewables needs to double to $150 billion by 2030 and rise fivefold by 2050. In this scenario, the ratio of investment in clean sources to unabated fossil fuels would rise from around 1:1 today to 4:1 in the 2030s, according to the IEA.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.