ECLAC Says Caribbean Has All the Right Conditions to Become Renewable Energy Hub

SANTIAGO, Chile – The Economic Commission for Latin America and the Caribbean (ECLAC) says the region has all the right conditions to become a renewable energy hub with great potential in green hydrogen.

Alicia Bárcena“Several countries in Latin America and the Caribbean have advantages for entering this market because their electricity matrices are relatively clean or are in the process of being decarbonized,” said ECLAC’s Executive Secretary Alicia Bárcena during a high-level panel held in the framework of Latin America Energy Week, organized by the international company Siemens Energy.

“These advantages are, in themselves, opportunities, which give rise to other opportunities. But to take advantage of them, some hurdles that could hamper the launch of this industry and/or its continuity must be resolved quickly and effectively by formalizing H2 (hydrogen) in the political, institutional and legal framework, including it in public agendas and giving space to and supporting the private sector, building a regional agenda and taking advantage of synergies to increase competitiveness.”

Bárcena said within the developing world, this region has been the hardest hit by the pandemic.

“It is time for an energy transition. The transition towards renewable energies is a powerful engine for growth, for combating poverty, creating jobs and contributing to climate action,” Bárcena said, noting also said that, in 2020, due to the coronavirus (COVID-1) pandemic, there was an average decrease of 15 percent to 20 percent in electricity demand.

But she said the pandemic’s impact worldwide on electricity demand last year was seven times greater than what was observed during the 2008 financial crisis.

Bárcena said that, despite the drop in announcements of foreign direct investment (FDI) in the context of the pandemic, renewable energy “held firm,” as the sector of greatest interest, equivalent to 33 per cent of the total amount of investments announced for the region in 2020.

“The pandemic has exacerbated inequalities in the region, which is why priority should be given to investments that close the gaps in access to quality and affordable electricity,” the ECLAC executive secretary said.

“First, we must provide electricity to the 20 million inhabitants who do not have it yet. This type of investment improves the social conditions of vulnerable segments, generating jobs and promoting the use of more sustainable technologies, which will ultimately contribute to the reactivation of the regional economy.”

Bárcena noted that, with an annual investment of 1.33 per cent of regional gross domestic product (GDP), between 2021 and 2032, equivalent to US$114 dollars per capita (US$80 billion dollars in constant 2010 prices), and utilizing renewable technologies (meaning solar and wind) in line with the targets of the United Nations’ Sustainable Development Goal 7 on access to affordable and clean energy (SDG 7), “the region can close the gaps in coverage and attain an electricity matrix with more than 86 percent of renewable energies.

“This could create 7 million jobs and reduce greenhouse gas (GHG) emissions by 30 per cent. We definitely need modern energy services that can bolster people’s health, education and livelihood and increase society’s resilience.”

In addition, Bárcena emphasized that financing for off-grid entrepreneurs and affordability for poorer households is one of the biggest challenges that must be resolved in order to achieve energy equality throughout the region.

“Firms in the energy sector can create value by supporting the region in addressing the challenge of energy poverty and inclusion, generating employment and playing a central role in decarbonization and the green transition. We must look to SDG 7 on affordable and clean energy. This is key.

“What we really need is for companies to not worry about big ventures alone but to also support small and medium-sized enterprises to create better jobs and services,” said Bárcena, calling for fostering the diversification of energy sources and supporting a subregional energy strategy.

“To achieve that, governments must understand that they have to work together. They cannot do anything on their own. That is why we must aim for integration,” she added.