State of the energy transition in Latin America
Argentina
Argentina's energy matrix is highly dominated by fossil fuels, representing around 90% of its primary sources, with natural gas and oil as the main components.[76]In comparison, its matrix is more dependent on fossils than the world average and the Latin American average. Regarding the secondary matrix, more than 50% comes from natural gas and approximately 30% from liquid fuels.[77].
The country already experienced an internal transition from oil to gas after the 1980s, and today it is positioned as a possible global supplier of gas, a fuel that is presented as a transition within the framework of the global energy debate.[78].
At the political level, the Ministry of the Environment has made progress in planning towards 2050 with the National Plan for Adaptation and Mitigation of Climate Change.[79]However, the use of gas in the energy matrix is maintained, which generates controversy.[78].
From the energy sector, two key documents were published in 2023: the "National Energy Transition Plan to 2030"[80]and "Guidelines and Scenarios for the Energy Transition to 2050". The first follows the trend of fossil dependence with low incorporation of renewables by 2030, while the second document proposes strategies towards 2050 that include energy efficiency, national technologies, resilience, low-emission hydrogen, sustainable mobility, and a just transition.[78].
Bolivia
In 2006, Bolivia developed a National Strategic Development Plan that promoted the replacement of fossil fuels with natural gas, given its abundance.[81] This plan promoted the change from diesel to gas in industries and public transportation, in addition to the construction of thermoelectric plants. Although Bolivia now has a surplus of electrical energy that it seeks to export, the lack of exploration has begun to deplete gas reserves.[82] Faced with this situation, Bolivia has begun to implement renewable energy such as solar and wind, although in an incipient manner and without a defined plan, also relying on hydroelectric energy.[83].
Bolivia depends mainly on natural gas for primary energy, while for electricity generation it uses hydroelectric and gas-fired thermoelectric plants.[83]The use of renewable energy is still incipient, although the country's geographical position offers potential for the development of solar and wind energy,[84]as well as for the production of green hydrogen. The areas of the high plateau "Altiplano (Central Andes)") and the inter-Andean valleys, for example, receive high rates of solar radiation.[85].
Currently, 81% of Bolivia's primary energy comes from natural gas, followed by oil and its derivatives (12%), biomass "Biomass (energy)") (5%) and wind, solar and hydroelectric energy (2%).[84].
Although there are some renewable energy projects, such as solar and wind plants financed by international cooperation and state resources, the energy transition is advancing slowly. At the same time, the advance of biofuel production has had a negative impact on the Amazon, due to agricultural expansion. Furthermore, a large part of the country's energy resources are located in indigenous territories, which have not been included in inclusive energy development, despite legal commitments of prior consultation.[83].
The lithium from the Salar de Uyuni, estimated to be between 21 and 23 million tons, has put Bolivia in the focus of international powers interested in this key resource for the global energy transition.[86].
Brazil
In 2023, Brazil doubled its investment in renewable energy, reaching approximately $34 billion, according to the International Energy Agency report.[87] This positions Brazil among the countries with the highest investment in energy transition, according to Bloomberg NEF's Energy Transition Investment Trends 2024 report.[88].
According to the Energy Transition Index prepared by the World Economic Forum, Brazil is ranked twelfth among the countries best prepared for the transition, being the best positioned Latin American country and leading investment in clean energy among the great powers.[89].
According to the National Energy Balance 2024 of the Ministry of Mines and Energy "Ministry of Mines and Energy (Brazil)"), 49.1% of the domestic energy supply comes from renewable sources, while non-renewable sources represent 50.9%. Regarding the electrical matrix, 89.2% is made up of renewable energies, led by hydraulic energy (58.9%), followed by wind (13.2%) and solar (7%).[90].
It is expected that by 2050, the Brazilian energy matrix will significantly reduce the use of fossil fuels, with a share of more than 70% of renewable sources in all scenarios. Biomass will be key in this transformation, followed by wind and solar energy.[91].
Agriculture, forestry and other land uses are responsible for the majority of Brazilian GHG emissions, 73% of the total, playing a fundamental role in making the country's carbon neutrality goal viable.[92]To achieve carbon neutrality in 2050, Brazil must eliminate illegal deforestation before 2028, since otherwise it would be unfeasible to achieve this goal.[91].
Chili
Chile has accelerated its energy transition in recent years thanks to broad political support, public-private partnerships and innovative green technologies. It has set the ambitious goal of converting 70% of its total energy consumption to renewable energy by 2030 and has committed to being carbon neutral by 2050.[93]During the year 2023, 37% of the energy generated in Chile came from non-conventional renewable energy sources.[94].
Following the creation of the Ministry of Energy "Ministerio de Energía (Chile)") in 2010, a national energy roadmap was established, and citizen consultations were carried out with the purpose of planning and promoting energy efficiency in the country. Following this line, in 2016 a National Electromobility Strategy was established, which aims to electrify all urban public transport by 2040 and that by 2050, 40 percent of the private transport fleet will be electric vehicles.[95].
Given the hydrography of Chile, the use of renewable energy in the country has been mainly concentrated in the production of hydraulic energy for the generation of electricity. The country has 68 hydroelectric plants.
On the other hand, the Atacama Desert located in the north of Chile has proven to be the place with the highest solar radiation on the planet, representing a great opportunity for the photovoltaic energy industry in the country. In 2012, the Government of Chile began a public consultation to develop the regulatory framework for the use and generation of electricity from renewable energies in the country. This led to President Sebastián Piñera creating "Law 20,571" or Citizen Generation Law enacted on March 22, 2014, which granted the right to every Chilean citizen to self-generate electrical energy for their own consumption (photovoltaic self-consumption in this case) and to be able to sell the surpluses produced to electricity supply companies. Chile has more than 30 solar parks.[96].
The location of Chile with respect to the South Pacific anticyclone and the morphology of its extensive coastline are determining factors for the development of energy generation facilities from wind resources. The first wind farms in Chile were installed in the early years of the 2000s. In 2001, the Alto Baguales wind farm came into service, initially with a generation of 2MW.36 In 2017, Chile had an installed power of 1,426 MW, (4.7% of the total energy generated in the country), contributed by 651 operational wind turbines. Currently, Chile is one of the main producers of wind energy in the region, after Brazil and Mexico.
Colombia
The energy transition in Colombia has been a gradual process that began with two key regulatory acts: Decree 2811 of 1974, which created the National Code of Renewable Natural Resources,[97]and Law 99 of 1993, which established the General Environmental Law.[98]This approach was strengthened in 1994 with Law 164, which approved Colombia's participation in the United Nations Framework Convention on Climate Change. Climate, promoting the reduction of greenhouse gas (GHG) emissions and the exploration of sustainable energies.[99].
In 2001, the Program for the Rational and Efficient Use of Energy (PROURE) was created to promote the use of non-conventional sources of renewable energy such as biomass, wind, solar and geothermal.[100]However, it was not until 2015-2016, following an energy crisis caused by a climate phenomenon, that the government began to seriously address the need for an energy transition.[101].
Colombia has formulated more than 30 legislative acts related to the energy transition, of which 29 are in force. The most important is Law 1715 of 2014, which regulates the integration of non-conventional renewable energies into the national energy system. Despite these advances, in 2020 fossil fuels, such as oil (40%), natural gas (26%) and coal (11%), continued to be predominant in Colombia's energy supply.[101].
In the electricity subsector, hydroelectric energy represented 65% of electricity generation in 2020. Regarding energy demand, the transportation sector was the largest consumer (35%), with 96% of its energy coming from fossil fuels. Industry was the second largest consumer (26%), mainly using natural gas (29%) and coal (28%), while the residential sector consumed 21%, highlighting firewood (37%), electric energy (35%) and natural gas (20%)[101].
In 2022, the update of the National Energy Plan (2022-2050) was published, the objective of which is to identify technological alternatives in energy production and consumption and evaluate their impacts on supply, competitiveness, sustainability, public finances and the country's economy. The document contemplates four possible scenarios to transform the Colombian energy system, reducing dependence on fossil fuels and increasing the participation of renewable energies: updating, modernization, inflection and disruption.[102].
Costa Rica
Costa Rica has made significant progress in its decarbonization and energy transition process, making the political decision to prohibit the fossil fuel extractive industry through a moratorium until 2050, established in Executive Decree 36693-MINAET.[103]From 2015 to 2022, the country has generated more than 98% of its electricity from renewable sources, mainly hydroelectric, without resorting to coal or gas power plants natural.[104].
The National Decarbonization Plan establishes objectives to gradually eliminate fossil fuels and achieve an economy with net zero emissions by 2050.[105]Despite these advances, fossil fuels continue to dominate the country's energy supply, especially in the transportation sector, which consumes 54% of the energy, driven by petroleum derivatives.[106].
In 2022, hydroelectric energy contributed 73% of electricity generation, followed by geothermal (13.6%) and wind (11.5%), while thermal plants contributed only 0.8%.[107]One of Costa Rica's challenges is eliminating seasonal thermal backup that relies on fossil fuels during the dry season, which requires the development of large-scale storage technologies.[106].
Regarding electromobility, Law No. 9518 of 2018 promoted electric transportation, exempting taxes for the import of electric vehicles and facilitating the creation of a network of fast chargers throughout the country.[108] This has encouraged the use of electric vehicles, with an average growth of 94% between 2018 and 2022, compared to 12% in the previous period. (2013-2017).[109].
Despite these advances, the industrial sector remains a challenge, since it still depends on fossil fuels, such as subsidized bunkering, which slows down decarbonization in this area.[106].
Ecuador
Ecuador still has a great economic dependence on hydrocarbons, given that the extraction of oil, natural gas and related service activities represent 3.8% of the country's gross domestic product.[110]Meanwhile, oil is Ecuador's main export product, with exports equivalent to a total of USD 10,013.12 million in 2022.[111].
Regarding generation, currently 75.05% of Ecuador's total electricity production comes from renewable sources, which are made up of hydroelectric, photovoltaic, wind and thermoelectric plants that consume biomass and biogas. On the other hand, 23.55% of the energy generated was produced through fossil fuels.[112].
Mexico
Mexico has implemented several laws and reforms to promote the energy transition towards the use of clean energy, such as the Energy Transition Law of 2015, the General Climate Change Law of 2012 and the Electrical Industry Law of 2022. These regulations establish public policies, strategies and mechanisms to regulate and promote the sustainable use of energy, reduce polluting emissions, and guarantee a universal electrical service based on clean energy.
Despite this legal framework, Mexico faces several significant challenges in its energy transition. One of the main challenges is financial, since the transition implies a fundamental change in the generation and use of energy, affecting public finances at both the federal and state levels. This change, aimed at decarbonization, negatively impacts budget revenues, since an increase in energy expenditure for clean energy is required.[113].
Another challenge is the nationalization of the energy sector, which has slowed the adoption of clean and efficient energy technologies and resources. In addition, the country has a deficit in infrastructure, especially in electrical energy storage systems, which compromises energy security and increases intermittency in supply.[114].
Mexico's energy sector is 89.1% dependent on fossil fuels such as oil, gas and coal, contributing to more than two-thirds of global greenhouse gas emissions.[115]Although Mexico has abundant renewable resource potential (solar, wind, geothermal and biomass), the infrastructure and institutional architecture have not facilitated its rapid integration into the energy matrix.[116].
Panama
Panama is characterized by being one of the rainiest countries in the world, which, among other variables, has allowed it to currently have around 97% renewable energy in its electricity generation matrix, mainly hydroelectric. However, reliance on hydroelectricity also presents challenges, such as rainfall variability influenced by climate phenomena such as El Niño ("El Niño (phenomenon)") and La Niña "La Niña (phenomenon)"), and the effects of climate change, which could increase the frequency of extreme events such as floods and droughts.[117].
To mitigate these risks, Panama has implemented a policy of diversification of its energy matrix, formalized in the Energy Transition Agenda (ATE) approved in 2020. This agenda seeks to increase the use of non-hydroelectric renewable energies, such as wind and solar energy, which went from almost zero in 2015 to representing 8.9% of electricity generation in 2021. In addition, the ATE promotes the insertion of electric mobility, access to modern energy, and the modernization of the electrical sector.[117].
By 2021, Panama already exceeded the regional average in the use of renewable energy, with 69% in the last four years, compared to 58% in the region.[118]At COP26, the country committed to maintaining at least a 70.4% share of renewable energy in its electrical matrix by 2030.[119].
Despite these advances, Panama remains highly dependent on fossil fuels, especially in the transportation sector, where diesel and gasoline represented more than 59% of energy consumption in 2020. This dependence is aggravated by the need to import oil and gas, which exposes the country to the volatility of international prices.[117].
Despite these advances, Panama remains highly dependent on fossil fuels, especially in the transportation sector, where diesel and gasoline represented more than 59% of energy consumption in 2020. This dependence is aggravated by the need to import oil and gas, which exposes the country to the volatility of international prices.[117].
Paraguay
Paraguay is one of the countries with the cleanest electricity production in the world, sharing this distinction with Albania, according to the World Economic Forum.[120]99.9% of electricity generation in Paraguay comes from sources that do not emit carbon dioxide, standing out for its high production of hydroelectricity per capita globally, mainly thanks to its two large binational dams: Itaipú and Yacyretá.[121].
Paraguay's electrical system is based almost exclusively on the generation of energy from hydropower, a renewable and non-polluting source. However, there is a disparity in their energy matrix. While the energy supply is predominantly renewable (47% hydropower and 33% biomass), energy consumption is significantly based on biomass (44.2%) and hydrocarbons (40.1%), which are polluting and completely imported.[122].
Peru
The increase in demand for minerals such as copper as a consequence of the global energy transition has meant a great opportunity for Peru, whose economy depends largely on mining.[123]However, this also poses challenges due to the socio-environmental conflicts associated with mining, which represent 37.3% of the total conflicts in the country, according to the Ombudsman's Office.[124].
Electricity generation in Peru continues to depend largely on fossil fuels. In 2023, 53% of energy came from hydrocarbon-based thermoelectric plants,[125]and only 8.2% of national energy is generated by non-conventional renewable sources, such as wind, solar and biogas.[126].
Renewable energy plants are distributed in 12 departments of Peru, mainly on the coast and the Andes, with no presence in the Amazon regions "Amazon Department (Peru)"), where access to electricity remains limited.[127].
Uruguay
Uruguay has an ideal location for the generation of solar, wind and hydraulic energy due to its peninsular landscape and hundreds of kilometers of ocean and river coastline. Without resources such as gas, oil or coal, between 2008 and 2009 Uruguay faced supply problems and high costs in energy production, due to the global increase in fuel prices.[128].
In 2010, Uruguay reached a multiparty agreement and adopted the energy transition towards indigenous and renewable sources as a state policy, guaranteeing its execution and continuity. The first stage of the energy transition meant more than US$8 billion of public-private investment. The transformation was carried out with a model in which the public sector had a role as coordinator of the system and administrator of the auction scheme, which provided certainty to national and international private investors.[128].
As a consequence of the implementation of this national strategy, Uruguay achieved the decarbonization of electrical energy generation in a short term. On average, renewables represented 93% of the electricity matrix between 2018 and 2022 (53% wind, solar and biomass and 40% hydroelectric), significantly reducing greenhouse gas emissions from the energy sector.[129].
The International Renewable Energy Agency (IRENA) highlighted the Uruguayan model and highlighted the system of calls made by the National Administration of Electric Power Plants and Transmissions (UTE), as examples to follow in its guide for the design of auctions. Private participation was highlighted through promotion schemes without depending on direct subsidies.[129].
In 2019, the International Energy Agency (IEA) rated Uruguay as the leader in Latin America in energy production and fourth in the world in terms of levels of electricity generation with wind and solar sources.[130]According to the United States International Trade Administration, it is one of the most sustainable countries in the world.[131].
In 2022, the energy supply reached 5,669 ktoe, which represented a historical record for the country with an increase of 27% compared to 2012 levels. The increase in energy generation was accompanied by a change in the composition of the total energy matrix. Energy from fossil sources significantly reduced its participation in the total supply, going from 60% in 2012 to 40% in the 2018-2022 average.[128]In contrast, biomass, wind and solar energy increased their relative importance. In 2022 the shares were 39%, 9% and 1% respectively, while in 2012 neither wind nor solar energy contributed to production. Hydraulic energy decreased the weight in the supply; It went from 16% between 2002-2012 to 10% between 2018-2022 (9% in 2022).[128].
Renewable energies represented 56% of the total energy matrix in 2022 (while in 2012 they were only 38%), an excellent number by international parameters. Regarding imports of electrical energy, they have systematically decreased in recent times and are currently of very little relevance within the country's supply matrix.[128].
Venezuela
Venezuela is one of the Latin American countries furthest behind in the adoption of clean energy. Despite the objectives set a decade ago to adapt to climate change and increase the use of renewable sources, less than 1% of its electricity consumption comes from solar or wind energy.
In 1999, Venezuelan electricity generation was dominated by hydroelectric sources (75.14%) and thermoelectric plants (24.86%).[132] By 2010, hydroelectric plants still represented 66% of generation, while thermoelectric plants, which use gas, diesel and fuel oil, reached 34%. However, the contribution of non-conventional renewable energies, such as solar and wind, remained marginal, at less than 1%.[133].
The most recent data from 2014 indicate a setback in Venezuela's energy transition. Thermoelectric plants began to represent 50.80% of the installed electrical capacity, while hydroelectric plants decreased to 48.84%. Solar and wind energy combined barely represented 0.36% of the country's installed capacity.
Oil remains crucial for Venezuela, contributing almost 60% of the national budget.[132]The majority of companies in the country (80.50%) used gasoline or diesel thermoelectric plants as an alternative source of energy in 2023, while 9% of companies had power plants powered by natural gas.[134].