Bloomberg Linea – If Latin America wants to benefit from the energy transition and exploit the potential of its vital minerals It must move from being an extractive economy to developing an industry that allows it to process sophisticated productsHe added that by diversifying its matrix beyond hydroelectric power plants, attracting the necessary investments and adopting basic technologies to compete at the global level. Bloomberg line Head of the World Bank’s Energy Department, Gabriela Elizondo.
Currently, according to the World Bank. US$66 billion is invested annually in Latin America in low-carbon infrastructure. However, for the region to achieve its goals of net-zero emissions by 2060, an investment of US$180 billion per year will be needed in the coming years.
“One of the challenges we have with minerals is that we have to move from just extracting minerals, or having a purely extractive industry, To have an industry that we refine“, said in the interview, the World Bank’s Energy Sector Practice Director for Latin America and the Caribbean.
If this is achieved, Latin America will face a second challenge that has not yet been overcome: It’s how to integrate global value chains to tap into these markets.
He considered that Latin America, first, must attract the investments it needs not only to extract important hydrocarbons and minerals, but also “Create high-value products”which will require Science and technology policies, research and integration of professional talents.
I think many Latin American countries are already starting to make their strategies a little more sophisticated. in LithiumFor example, in Chile you see an evolving strategy and they are starting to implement projects on how to go from just extraction to creating some important products.
He also pointed to the case of green hydrogen, saying he believes Latin America can take advantage of the moment and its comparative advantage in adopting renewable energies. To invest in developing this source and producing it at a more competitive cost globally.
It is estimated that Latin America possesses one-third of the world’s reserves Lithium, copper and silver, which will be essential for the energy transition to occur.
In the case of copper, the region contributes about 40% of global production, with Chile and Peru being the most important markets. In lithium, Latin America has 35% of the world’s reserves, concentrated in Argentina, Bolivia and Chile.
According to figures provided by the World Bank, The contribution of renewable energies to the region’s matrix reaches 61% and is expected to reach 80% by 2050.This is according to the scenarios proposed by the International Energy Agency.
The four pillars of decarbonisation
The World Bank says there are four macro-level decarbonization measures that Latin America can implement to make more solid progress in this area.
The first is to do The electrical matrix is cleanerfollowed by enhancing energy efficiency for Reduce final energy consumption.
Seeking the third action Electrification of industry and transportationwhile the latter focuses on Make those sectors that cannot be electrified cleanerwhich is known as the residue.
To measure progress in these areas, the World Bank uses an index called… Regulatory Indicators for Sustainable Energy (RISE)which assesses political intentions, regulatory frameworks and planning for decarbonisation.
Among the countries most intensively developing this indicator are Mexico, Brazil, Chile, then Argentina and Colombia.
“This index looks at renewables, energy efficiency and energy access and looks at all dimensions in each of those three dimensions. See e.g. The ability of countries to implement strategic planning and the extent of progress of these marketsFor example, in terms of regulation, pricing and subsidies, i.e. best practices in everything that needs to be connected from renewables to the grid.
The challenge is due to the heavy reliance on hydroelectric power plants
Latin America faces an important challenge with regard to diversifying the energy matrix Most of the contribution to renewable energy sources is provided by hydroelectric power plants These areas are exposed to pressure due to climate shocks, especially droughts.
In the case of a country like Colombia, 70% of its electricity needs are provided by hydropower.But amid the effects of El Niño, reservoir levels have come under pressure and cities like Bogotá have been forced to implement area-based rationing, which the city mayor’s office recently announced.
In this regard, Elizondo said, “Latin America relies heavily on hydropower plants,” which could be a problem.Because it leaves you vulnerable to El Niño and La Niña phenomena.
“Droughts, of course, tell you whether or not you’re going to have renewable electricity or consumption electricity, and then that of course affects the marginal cost in the short run, and in Colombia you have a very developed electricity market; Which of course passes the prices on to the consumer. He explained that this has a strong impact.
The World Bank believes that climate change is having an impact on the availability of hydroelectric power plants and that this will be more pronounced in the long termFor this reason, he suggests that the region must move towards a process of diversification and, above all, adding renewable sources because “adding plants based on thermal fuels also has a problem, which is the volatility of oil prices.”
“So, it is complicated because there is still potential for hydropower, but at the same time you cannot rely only on hydropower plants because of the problem of El Niño, La Niña and long-term climate change,” Elizondo said.
Low economic growth affects countries that are still dependent on oil
Elizondo Expressed that in an environment of low economic growth in Latin America in 2024, negative impacts on the energy transition and investments may be evident, At least as quickly as low-carbon infrastructure can be delivered.
According to the Executive Authority, fossils contribute just over 60% to the region’s primary energy matrix, while the global average is 80%.
“Although we are a region with a lot of renewables and very clean in its electrical matrix, there is a lot more we need to do to comply with our commitments to net zero emissions in the coming decades,” he said.
He expressed that to achieve the proposed climate goals, countries must make greater efforts in the field of electricity, however “In particular transmission, distribution and green electron evacuation infrastructure.”
He also considered it important to invest in the development of hydrogen and “in everything necessary so that what cannot be electrified in industry and transportation becomes a clean fuel.”
Conclusions of the Energy Ministers’ Meeting
The region’s energy ministers met in Punta Cana on March 6. Energy Ministers of the Energy and Climate Alliance of the Americas (ECPA) meet to discuss how to transition towards clean, resilient and inclusive energy systems.
During the meeting, The head of the World Bank’s energy sector said that various governments affirmed and recalled the commitments made, and highlighted the achievements achieved so far.
He highlighted that many Latin American countries It has set emissions reduction rates, intensified its efforts, and even made them more ambitious.
There has been great momentum in the region towards new policies and strategies in various sectors, Such as designing hydrogen plans and setting ambitious targets for renewable energy, at least on paper.
Elizondo pointed to progress not only in the electricity sector, in which a high level of renewable energy penetration has already been achieved, but also in other sectors such as transportation and industry, where Work is underway to electrify and adopt technologies such as hydrogen.
“There is really something great here Paid In Latin America, although already a very clean region, rapid progress is being made on all fronts.
