In a recent report, the International Energy Agency (IEA) highlights Latin America and the Caribbean’s pivotal role in the worldwide shift towards a more secure and sustainable energy system. Titled the Latin America Energy Outlook, this first-of-its-kind analysis underscores the region’s abundant resources and its potential to drive transformative change both domestically and internationally. Amidst heightened geopolitical uncertainties and a rapidly evolving energy landscape, the report underscores Latin America’s extraordinary endowment of energy and mineral resources. With a rich history of clean energy leadership, the region is poised to exert a growing influence on the global energy sector, according to the IEA.
The comprehensive IEA report covers all 33 countries in Latin America and the Caribbean, emphasizing the diverse range of fuels and energy technologies. It emphasizes that with the right policies, the region’s wealth of resources, spanning from high-quality renewables to oil and gas to critical minerals, could significantly contribute to global energy security and clean energy transitions.
Latin America and the Caribbean currently boast one of the cleanest electricity sectors globally, with renewables, led by hydropower, generating 60% of the region’s electricity—twice the global average. Countries such as Brazil, Mexico, Chile, and Argentina possess some of the world’s best wind and solar resources. The report also notes widespread use of bioenergy in the region, making it a major exporter of biofuels.
Highlighting the region’s global significance, Latin America and the Caribbean hold about 15% of global oil and natural gas resources, alongside substantial reserves of critical minerals like lithium, copper, and silver. The IEA report underscores that the clean electricity supply in the region lays the foundation for sustainable mining and processing of these materials.
IEA Executive Director Fatih Birol stated, “Latin America and the Caribbean can play an outsize role in the new global energy 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. Leaning into these transitions would ignite growth in local economies – and put the world’s energy system on a surer footing. Our report shows that supportive policy making and international cooperation are essential to ensure the region can take full advantage of its remarkable energy potential.”
However, the Outlook report also identifies a substantial gap in policy implementation. While 16 out of the 33 countries in the region have pledged to reach net-zero emissions by mid-century, current policy settings project continued use of fossil fuels for a large share of energy needs. If countries’ pledges are realized, the IEA report envisions renewables meeting all new energy demands in the next decade. This shift could lead to increased oil exports, competitive renewable resources driving low-cost hydrogen production, and a doubling of long-term revenues from critical minerals.
To bridge the policy gap, the report recommends four key actions: ramping up renewable energy adoption, advancing electrification of industry and transport, driving energy efficiency, and boosting access to clean cooking solutions. The IEA stresses that supportive policymaking and international cooperation are essential to unlock the region’s full energy potential.
Investment in the region must also substantially increase, with the report calling for clean energy project financing to double by 2030 and rise fivefold by 2050. Achieving this would shift the investment ratio from around 1:1 to 4:1 in favour of clean sources over unabated fossil fuels.
The IEA concludes that Latin America’s commitment to a people-centred transition must prioritize universal access to modern energy at affordable prices. Approximately 17 million people in the region lack access to electricity and 74 million lack access to clean cooking supplies. In addition to addressing carbon dioxide emissions, the report suggests measures to reduce methane emissions from oil and gas operations. By implementing these measures, major producers in the region could achieve nearly 80% reduction at low cost and around 40% with no net costs.
IEA emphasizes its ongoing collaboration with Latin American and Caribbean countries and stands ready to support governments as they advance their clean energy transitions. The IEA family now includes five Latin American countries: Argentina, Brazil, Chile, Colombia, and Mexico.
Dr Birol concludes, “The special report is a milestone in our work with Latin American and Caribbean countries, and we look forward to further regional and bilateral collaboration inspired by its analysis, which lays out a clear pathway for countries to meet their energy objectives. The IEA stands ready to support governments across the region as they advance their clean energy transitions, building a more secure and fairer global energy system in the process.”
