Moody’s: neutralizing carbon is not a priority for Latin America due to its low emissions

The neutralization of polluting gas emissions is not a priority for Latin America because the region considers that its carbon emissions are low compared to other regions, according to a study released by the risk rating agency Moody’s.

According to the study, the objective of reducing net carbon emissions to zero, that is, of reducing own emissions and offsetting those unavoidable with mitigation actions, has a low priority on the agenda of legislators or governments of Latin America in general.

Both parliaments and governments consider other challenges in the region to be a priority because “the emissions of greenhouse gases in the region are relatively low compared to other regions,” says Moody’s.

The only exception is Chile, where a bill to implement a legal framework to regulate the carbon transition towards a more sustainable economy is already under discussion.

According to the rating agency, regardless of the implementation of policies or legislation to seek neutralization of emissions, the sectors that know they will be the most affected by the carbon transition in Latin America have been taking the initiative to implement their own compensation measures .

“Although most of the main economies in the region do not have defined objectives for the gradual reduction of their emissions due to the fact that other policies take priority, such as the reactivation of growth, several industries are already taking action regardless of any mandate that is established. issue at the national level on zero net carbon emissions “, assures the rating agency.

In addition, most Latin American emitters from sectors considered as high risk for the carbon transition have less exposure than their peers in other regions due to the fact that they already have a high proportion of renewable energy use, as well as mitigation strategies. and product diversification.

“Metals and mining companies in the region have manageable levels of exposure to the carbon transition as some produce ‘green metals’ that will help offset their gross emission levels,” explained Gersan Zurita, one of the senior vice presidents of Moody’s and co-author of the report, quoted in a statement from the rating agency.

According to Zurita, utility companies have an exposure to the carbon transition that can vary from high to moderate, since electricity is an important contributor to the region’s emissions, “but there is a significant generation of renewable energy. in Latin America that helps keep emissions relatively low ”.

For Nymia Almeida, also senior vice president of Moody’s and co-author of the study, companies in the oil and gas sector in the region will take longer to neutralize their emissions than companies in other regions because “parastatal oil companies have been slow to direct their efforts to the reduction of emissions ”.

According to the study, it should be noted that paper and cellulose companies, as well as protein companies (mainly meat), have strengthened their environmental standards, although they will continue to face challenges as the pressure to advance in the transition intensifies globally ”.

Regarding financial institutions, despite the fact that their environmental risks are relatively low, the rules established by banking regulators are changing and are giving greater relevance to the so-called environmental, social and governance (ESG) aspects.