While 2022 saw the beginnings of transformation in Latin America’s energy sector, globally, the year has been marked by a historic energy crisis and increasingly visible climate impacts. Indeed, in the lead up to COP27, the tension between the need to drastically reduce emissions and the need to maintain energy security amidst the Russian invasion of Ukraine became increasingly pronounced. However, despite these complex challenges, the transition to renewable energy progresses at an ever-quickening pace, and an influx of new leaders in South America have brought climate and renewable energy targets to the forefront of many countries’ policy agendas. In this context, industry experts, government officials and corporate representatives convened virtually to discuss the challenges, opportunities, and changes in Latin America’s energy sector at at the Sixth Annual Latin America Energy Conference.
The first panel examined how the Russian invasion of Ukraine, and ensuing inflation and fuel price volatility, has impacted the regional energy sector. Higher fuel prices exacerbated economic struggle in net importer countries, especially those reliant on the spot market like Caribbean nations. In contrast, increased rents for net exporters improved their economic standing; however, panelists expressed concern over funneling rents towards inefficient fuel subsidies, which are difficult to phase out and slow the transition to renewables and electric vehicles. In this context, panelists remarked, the politics of any given country’s political administration, rather than the consistently high fuel prices, constitute a decisive factor in a state’s energy transition progress.
The second panel discussed net zero emissions strategies in the private sector and the opportunities found in the transition. Many companies aim to tackle emissions across their entire value chain (Scope 3); however, those are far more difficult to control than direct operational emissions (Scope 1 and 2). Since a company’s Scope 3 emissions tend to be five times higher than their Scope 1 and 2 emissions on average, tackling this source is imperative. Panelists agreed that while the private sector is increasingly creating metrics to strengthen their commitments, standardization of net zero strategies and regulations for climate disclosures could greatly improve overall transparency and efficiency.
The final panel centered on disruptive, innovative technologies that are accelerating the energy transition in the region and abroad. As increased variable or intermittent renewables come online, the power grid will transform, with technologies like battery storage, smart grids, and vehicle-to-grid improving grid flexibility and responsiveness. In difficult to abate sectors, innovations in carbon capture, utilization, and storage (CCUS) will also likely transform sectoral infrastructure, operations, and finance. Overall, as these technologies are at different stages of implementation across countries, regions, and local jurisdictions, panelists agreed that widespread collaboration and knowledge exchange will be critical to improve regulatory frameworks, incentives structures, and technical implementation.
