Tremendous, but untapped potential: a Green Recovery for Latin America

During the last months, Latin America has become the main COVID-19 focus worldwide. In early September, the region concentrated more than 27% of the COVID-19 cases globally and 31% of its deaths. High rates of inequality and poverty, failures in the health system and political instability are the main reasons for this dramatic situation. And it seems to get worse in the upcoming years: according to the UN COVID-19 will result in the worst recession in the region in a century, causing a 9.1% contraction in regional GDP in 2020. Consequently, the number of poor could increase by 45 million (to 230 million in total) and the number of extremely poor by 28 million (to 96 million in total). As political and social instability has already characterized 2019, the risk of a period of human rights violations and a lack of democracy is real. Maximiliano Proaño reports

Latin America Covid-19 recovery has the chance to focus on energy transition. (CC BY 2.0, Diego Torres Silvestre )


However, contrary to the negative scenario, an energy transition boost could play a key role for the post COVID-19 Latin American recovery. Many international agencies, NGO´s and grassroots organizations state that a strong boost for the decarbonization of the Latin American economies represents a big opportunity to overcome the crisis caused by COVID-19. The International Renewable Energy Agency (IRENA) and even the Latin American Energy Organization (OLADE) have suggested putting renewables at the heart of the region’s economic recovery. According to IRENA’s Global Renewables Outlook, a strong impulse of the renewable energy share in Latin America and the Caribbean could create more than three million jobs across the region by 2050. Besides, the process would offer economic returns of between USD 3 and USD 8 on every dollar invested in the energy transformation. While 7.5 million jobs would be lost in polluting fossil-fuel extraction and livestock farming, it estimated 22.5 million jobs would be created mainly in plant-based agriculture, green transport and renewable energy like wind and solar power.

Latin American civil society organizations themselves have also activated wide networks calling for a green recovery plan. One of these initiatives is “Pacto Social del Sur (Southern Social Pact)”. It proposes a social, ecological, economic and intercultural pact for Latin America demanding “a radical socio-ecological transition, an orderly and progressive move away from dependence on oil, coal and gas, mining, deforestation and large-scale monoculture plantations. We need to shift to renewable energy systems that are decentralized, decommodified and democratic, as well as collective, safe and good quality transportation models”. Another active organization in that field is “Reactivación Transformadora (Transforming Reactivation)”, the Latin American network for a sustainable, fair and inclusive future in Latin America and the Caribbean (LAC). It demands to “establish fiscal reforms that promote the gradual elimination of subsidies that are harmful to the environment, aiming at the decarbonization of the economy of the entire LAC region by 2050, through a just energy transition”.

Despite all the arguments mentioned above, it seems that a green recovery and a boost to the energy transition will take a backseat in Latin America. There are several reasons for that. First of all, the lack of effective regional institutions to coordinate policies, plans and funding lead to each country taking its own decisions on how to overcome the crisis. Second, the weak democratic fundaments, the high inequality and the absence of a strong social protection system deepen the social crisis. Third, the region had been immersed in a period of political and social instability already before the COVID-19 crisis. Lastly, the Latin American and the Caribbean economies are based on commodities extraction and exportation. The region holds 40% of the world’s biodiversity, almost 50% of tropical forests, while a 45% of its oil and 58% of its coal are exported outside the region, and it is also one of the world’s leading food exporters. Therefore, the ecological transition would drastically alter the economic system.

Besides these various factors, the lack of political will of governments in Latin America is the decisive reason to be pessimistic about a green recovery via a just energy transition in Latin America. Their priority is to encourage privatization or to promote private investment in projects focused on the extraction of natural resources. Take for example the case of the Camisea natural gas field in Perú or la Vaca Muerta (shale oil and gas field) in Argentina. Brazil announced a recovery plan to the COVID-19 crisis based on concession processes and privatization drives. The plan considers exploratory projects for natural reserves such as oil, gas and minerals. The Chilean government announced faster granting permits for investment projects, which also translates into less time in the environmental evaluation of large projects. Meanwhile, Mexico’s President Andres Manuel Lopez Obrador said his recovery plan would be based on infrastructure and energy, consisting mainly in the rehabilitation of the six refineries and the construction of the new “Dos Bocas” refinery.

In conclusion, Latin American governments have so far failed to offer alternatives to maintaining the current productive model based on extractivism and commodities export. Yet, most of the socio-environmental conflicts of the region nowadays are caused by the energy, mining and agricultural sectors. As ILO and IDB  report states, decarbonization can create jobs, bring economic and social benefits, and help to protect the region’s great natural heritage. It is of course never easy to carry out such a big change, but it is the moment to start the transition process to better deal with future crises such as COVID-19 and to face the major challenge of climate change.

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Maximiliano Proaño

Max Proaño is a lawyer and social scientist, and currently works as a parliamentary adviser in energy and environmental issues. He has vast experience working in the public sector and civil society organizations.

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