Attracting capital, the great challenge for the energy transition in Latin America

Latin America it starts on the road to the energy transition with an advantageous position, but the development of alternative sources faces the difficult challenge of attracting capital flows to finance it.

This was explained by the executive secretary of the Association of Oil, Gas and Renewable Energy Companies of Latin America and the Caribbean (Arpel), Carlos Garibaldi, in an interview with EFE on the occasion of his participation in the eighth OPEC International Seminar. in Vienna.

He remembered that the 61% of the region’s electricity generation comes from renewable sources, twice the global average.

With the 8.3% of the planetary population, emits only the 4.5% of CO2 emissions and the 8.3% greenhouse gases, Garibaldi noted.

The emissions come for the most part “of agriculture, land use and forestry”, while the energy sector generates only 43%, compared to the world average 75%

“The region is a major global carbon sink, with approximately half of the remaining tropical forests on the planet”hence “Runs with a head start on the energy transition”indicated the head of Arpel.

He also highlighted the “important wind alleys” in the Patagonian region and its coastal areas, and the “world class solar resources” in Atacama and the tropical zone.

“Since the cost of producing electricity is the fundamental factor of competitiveness to produce green hydrogen, Latin America and the Caribbean starts from a good base”he commented.

Looking ahead, the question is whether Latin America will be able to finance the necessary development of the sector. According to Garibaldi, the region “It is self-sufficient today, energetically speaking.”

“The biggest challenge is that due to its need for development, regional demand would double in 25 years, and that will require projects, capital and rationality when defining investments”he explained.

“The biggest challenge is the need for investment”stressed the Argentine, recalling that “We are not investing enough in renewable energies globally or regionally, nor is financing being obtained to decarbonize oil and gas operations and facilities”.

“Attracting the huge capital necessary for energy ventures of any kind requires legislative, fiscal, regulatory and judicial ecosystems that are solid, aligned, efficient, transparent and, above all, stable”he stressed.

Still, it is expected that the costs of renewable energy around the world will fall in the future.

Garibaldi advocated that industrialized countries “update” their aid to the energy transitions of developing nations, since up to now they have not met the initially planned flows of 100,000 million dollars per year between 2020 and 2025.

“It would be logical to increase these amounts to compensate for the time lost (…) The new goal is estimated to now widely exceed 300,000 million dollars annually”, he indicated.

It is a “pending matter” to be addressed at the next Climate Conference (COP28), from November 30 to December 12 in Dubai.

Source: EFE