Latin America Energy Outlook 2023

State of play

Summary

  • Latin America Energy Outlook 2023 is the first IEA outlook for the region. It contains in-depth country and regional analysis of the energy outlook, opportunities and key challenges in this vast and diverse region which is home to about 8% of the world population, 7% of global GDP and around 6% of global energy supply and demand.
  • Latin America and the Caribbean’s (LAC) economy is natural resource intensive, and its high level of dependence on these resources, such as fuels and minerals, exposes its economy to volatility in international markets and price cycles. Pursuing opportunities in the new energy economy could help boost its economic development. Its low-emissions power sector, critical mineral resources and potential for clean energy development mean that the region could play a key role in clean energy transitions. High environmental, social and governance (ESG) standards are needed to sustainably harness this opportunity.
  • LAC is rich in energy resources ranging from hydropower to unconventional gas. There is significant potential for further development of bioenergy and high quality solar and wind resources. Brazil, Mexico, Argentina and others are major oil and gas producers. Some producers face declining production, such as Venezuela, while others are seeing a surge of new supply, such as Guyana. Colombia is the main coal supplier in the region, and Chile, Peru, Argentina and Brazil produce large volumes of critical minerals such as lithium, copper and graphite.
  • The region accounts for just 5% of global cumulative energy-related greenhouse gas emissions to date. This reflects the longstanding reliance of the electricity sector on hydropower. But fossil fuels are still the main source of energy, and oil remains the dominant fuel in many countries, primarily for use in transport and industry. 
  • LAC has one of the highest levels of income inequality in the world. This is evident in the energy-related emissions profile in which the richest 10% of the population account for 40% of total emissions while about 17 million people remain without access to electricity. A just transition calls for universal access to modern energy at affordable prices and should involve communities and ethnic groups.
  • Half of the countries in the region have pledged to achieve net zero emissions by mid-century or earlier. They represent around 65% of GDP in the region and 60% of its energy-related CO2 emissions. The region needs to boost investment in clean energy technologies to reach its energy-related emissions reductions goals. Efforts to reduce emissions in the region must also look to agriculture and land-use change, which account respectively for 25% and 20% of its total greenhouse gas emissions. This highlights the importance of tackling deforestation.
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