Energy Transitions in Latin America. The Tough Route to Sustainable Development

ESTEBAN SERRANI; LIRA BENITEZ

Springer Nature

Año: 2023 p. 362

978-3-031-37475-3

The transition toward sustainable energy systems in developing countries such as Latin America faces a significant structural obstacle: the scarcity of public resources to finance the necessary infra- structure transformations for achieving environ- mental and productive sustainability. The need to rely on international funds and private banks to develop renewable energy projects makes it chal- lenging to generate virtuous synergies between green financing, industrial policy, and genuine job creation. Therefore, when analyzing the eco- nomic dimension of transitions, it is crucial to consider their fiscal cost, including new infra- structure and technologies required to move away from existing fossil energy sources. This also involves recognizing that energy transition requires a comprehensive approach, including policies that support Sustainable Development Goals, and effective global governance mecha- nisms that promote cooperation and financial support for energy transition.In the global context, the reduction of GHG emissions, the finance of the energy transition and the fiscal costs derived from the stranded assets have become a complex topic. Moreover, the region is responsible for less than 10% of global CO2 emissions, has had marginal partici- pation in the historical stock, and possesses one of the world’s largest hydrocarbon reserves. This situation puts pressure on the region to reduce the exploitation of its fossil resources to accompany the decarbonization agenda, resulting in fiscal impacts. This book explores some of these dilem- mas, including the composition and magnitude of stranded assets. In the electricity sector, for example, the study by Bistend et al. (2019) esti- mated that an investment of 2.6 trillion dollars would be required between 2021 and 2050. However, the energy transition cannot be viewed in isolation from other sustainable development objectives, such as improving access to basic health services, reducing poverty and inequality, and conserving ecosystems. Galindo et al. (2022) highlighted that addressing these broader objec- tives would require between 7% and 19% of annual GDP to be allocated to infrastructure and social spending in 2030, which translates to a spending range of US$470 billion to 1300 bil- lion. Specifically, the climate crisis would require spending between 2% and 8% of GDP on infra- structure services and between 5% and 11% of GDP on various social challenges.