If there is a cliché about Latin America, it is that the region is a continent of “lost decades” and “missed opportunities”. In fact, Latin America has some of the worst growth rates and income inequality in the world. These are great challenges that the region must address as a priority.
Less well known is that the region is developing in areas that are critical to the future of the planet. Latin America is well positioned to be part of the solution to major global challenges, including climate change, food insecurity, and the preservation of biodiversity. Therefore, the region is at a crossroads that could mark its future. But the region and its partners must seize this unprecedented opportunity.
The leaders of Latin America and the Caribbean and Europe, who meet in a summit in Brussels starting this Monday, should take advantage of this opportunity, exploring ways to help with policies that promote adequate financing, encourage productivity growth, favor investment in physical and digital infrastructure, improve regulatory frameworks, increase capacity and training, and improve planning in all crucial areas.
Let me highlight some of these areas where the region has great potential. First, Latin America is becoming a clean energy powerhouse. Today, almost 30% of its energy comes from renewable sources, twice the world average. In Central America, that figure is 80%. With the right tools and incentives, the region could lead the world in exporting clean energy.
Chile, Colombia and Costa Rica, for example, have already announced three of the six best climate strategies in the world, according to Climate Action Tracker.
Latin America’s clean energy matrix gives it a competitive advantage in the production of clean fuels, such as green hydrogen, for both domestic and global use.
Chile, for example, is strongly investing in a green future. It seeks to produce the world’s cheapest green hydrogen by 2030 and become a top exporter by 2040. We expect hydrogen demand to remain strong for the foreseeable future. We are not the only ones betting on that future. Last month, the European Union announced that it would provide more than $200 million in grants and loans to support Chile’s potential. That is creating opportunities for local, regional and international companies that want to go green and ensure the sustainability of their supply chains.
Brazil, which has one of the world’s most carbon-intensive energy sectors, is also eyeing an ambitious green hydrogen program. We estimate that, by 2050, Brazil could export 4 million tons per year. Brazil is also becoming a climate leader in other areas. With only 3% of the world’s population, it already accounts for 7% of its renewable energy production. It also ranks second globally in renewable energy job creation and installed more new wind power plants last year than any other country except China and the United States.
Second, the region is home to some of the greatest natural resources in the world, including the Amazon rainforest. The Amazon alone absorbs a quarter of the CO2 absorbed by the entire planet, thereby mitigating climate change that is taking place around the world. But the Amazon is at risk and time is short.
Protecting the Amazon means involving its native communities and fostering the regional economy. In fact, the right approach could boost local GDP by more than $8 billion a year by 2050 and create more than 800,000 jobs in the bioeconomy and other areas, according to new research from the World Resources Institute. That is why we are launching an umbrella program, Amazonía Siempre, which coordinates initiatives and takes a regional holistic approach to preserve the rainforest while encouraging sustainable economic development in the region.
Third, Latin America can help alleviate food insecurity, another important global public good. The region is already the world’s leading net food exporter, producing enough to feed 1.3 billion people, twice its population. With the right frameworks and reforms, it could dramatically increase its production, while protecting its ecosystems and reducing food insecurity in the region and globally.
Finally, the region also has unparalleled potential to help the world address climate change, taking advantage of its remarkable wealth of raw materials. Latin America has significant nickel and graphite reserves and is home to two-thirds of the world’s lithium and 38% of its copper, both crucial for the production of electric vehicles and the green transition. Investors are taking notice.
Argentina, which has several lithium mines in operation and another 38 in the pipeline, is now the fastest growing lithium producer in the world. With the right policies, we estimate that Latin America could export $50 billion a year by 2050 while helping the world meet its net zero emissions targets.
The region’s green transition is creating opportunities for local, regional and international companies that want to go green and ensure the sustainability of their supply chains.
For example, the German automaker Volkswagen has switched to selling electric vehicles in Uruguay in part because the country is supplied almost entirely with clean energy. This helps Volkswagen meet its own carbon neutrality targets.
European companies could also turn to the region to comply with a proposed EU supply chain law that sets business sustainability requirements.
Many of the region’s climate investments also address other key EU priorities, including digitization and gender equality, for example by training women to build solar energy panels.
Seizing this opportunity also means creating much-needed jobs. We estimate that the region’s transition to a net zero emissions economy would favor the creation of 15 million net jobs. In Chile, it could increase GDP by 5%, add $336 billion to the Colombian economy and more than $100 billion in Peru.
Doing the right thing for the planet is turning out to be good business for Latin America and the Caribbean and its public and private partners. The region of the “lost decades” has found an immense opportunity. Let’s make sure we take advantage of it.