Latin America and Caribbean Energy Transition -Sectors and Companies Driving Development

Latin America and the Caribbean's (LAC) energy transition is gaining pace. Unlike many other parts of the world with high dependencies on thermal power, hydropower is the region's largest source of power generation. Furthermore, significant solar and wind capacity additions will capitalize on the region's climatic conditions, which will generate further possibilities for low-carbon hydrogen. Additionally, the LAC region's supply of renewable fuels is expected to increase steadily within the next decade, increasing at a CAGR of 4% between 2020 and 2035. Meanwhile, although electric vehicles and CCUS are currently struggling to gain traction in the region, policy support along with private-public sector partnerships will help to facilitate future adoption.

Latin America and the Caribbean (LAC) finds itself at a relatively early stage of the energy transition. Although the region consistently achieves high rates of renewable 72% of total generation in 2023, the potential of its energy transition technologies is currently untapped. However, this is about to change with large amounts of renewable energy and green hydrogen production capacity in the pipeline.

Hydropower is the largest source of electricity generation in LAC supplying 50% of power across the region in 2023, with the rest being met mainly by natural gas, coal, and oil-fired power plants. By 2035, wind and solar PV will greatly increase in capacity, causing these two renewable energy sources to account for almost 36% of total generation.

Passenger electric vehicles have seen slow uptake in LAC, but recent policies in some countries have set ambitious EV targets in the heavy duty and public transport sectors. With many countries already having relatively clean electricity due to hydropower, the potential is high for reducing emissions in the near term with EVs. Several Latin American countries have introduced financial incentives to help remove barriers to EV adoption.

Brazil has long been a global leader in biofuel production and use, mainly producing ethanol from sugarcane. With advancement in renewable fuel technologies, other agricultural and waste products will be used to create fuels like renewable diesel and sustainable aviation fuel (SAF).

Carbon capture in LAC has little activity, with one active, one planned, and two announced projects. All of these are based in Brazil, with Petroleo Brasileiro holding a share of ownership in each project. However, there has been no announcement of CCUS projects in the pipelines in any other country within the LAC region.

Total green hydrogen capacity in LAC could potentially reach over 10 million tons per annum by 2030. Currently, Brazil has the highest active capacity (14 ktpa), using mostly solar PV, as well as onshore and offshore wind. Brazil also has the highest pipeline capacity, with a predicted 5.5 million tons per annum by 2030. Chile is in second place with an expected pipeline capacity of 3.6 million tons per annum by 2030. Chile is set to become a global leader in the production of low-cost green hydrogen due to excellent wind and solar resources in its southern and northern regions, respectively.

Key Highlights

• Between 2018-2035 renewable power capacity is expected to strongly increase. Offshore wind will experience the strongest growth, experiencing a CAGR of 45% between 2023-2035, although this is largely a reflection of the current capacity being extremely low. Other strong growth segments in terms of capacity include solar PV, which will experience a CAGR of 15.6% between 2023 and 2035.
• By 2035, the LAC region is expected to achieve 77% renewable generation, exceeding the RELAC initiative regional target.
• Adoption of electric vehicles within the LAC region has been slow so far, with electric vehicles holding just a 6% share of total light vehicles across Mercosur countries in 2023.
• Brazil is expected to remain one of the world's largest ethanol markets by 2035, and will also account for 93% of the LAC region's ethanol production in 2035.

Scope

• Current LAC leaders in energy transition technology
• Renewable energy policies and economics
• Power capacity share outlook
• Power generation outlook
• Largest economies- renewable share
• Thermal power decommissioning emissions
• Major players in solar and wind: owners, manufacturers, and EPCs
• Passenger EV outlook
• EV policies
• Renewable refinery active and upcoming projects
• Renewable fuels market outlook
• CCS/ CCU projects
• National hydrogen strategies
• Upcoming hydrogen projects
• Hydrogen capacity forecasts
• Intended use sectors for hydrogen
• Case Studies

Reasons to Buy

• Obtain the most up to date information on recent developments and policies for LAC's energy transition.
• Identify opportunities in upcoming projects involving electric vehicles, solar and wind power generation, EVs, CCS and hydrogen production in the LAC region.
• Assess competitors based on their active and pipeline capacities for renewable energy generation, CCS/CCU projects and hydrogen projects
• Develop business strategies by identifying the most promising sectors for future growth.