Opportunities and Challenges of the green transition in Latin America and the Caribbean
According to the OECD´s Latin American Economic Outlook 2022, it is urgent to advance in the green and just transition in the region. It is a unique opportunity to improve well-being for all, tackle inequalities, tap into new sources of employment and financing, and a more sustainable and inclusive development. An effective green transition in LAC could potentially add 10.5% more new jobs by 2030 and can be the cornerstone of a new sustainable social contract in the region.
Highlights of the executive summary of the report:
- LAC region faces a complex context, on both domestic and international scales. Estimates suggest that by the end of 2022, 33.7% of the LAC population will be in poverty and 14.9% in extreme poverty, as rising prices have more profound effects on the most vulnerable population.
- LAC is one of the most vulnerable regions to climate change: 13 of the 50 countries identified as most affected by the climate emergency are in LAC when its share in global greenhouse GHG emissions is just 8.1%, similar to its share of total global population (8.4%) and slightly higher than its share in total gross domestic product (6.4%). A 2.5°C global warming scenario could cost the region between 1.5%- 5.0% of its GDP by 2050.
- Green transition can help boost productivity, develop new and more sustainable economic sectors: Advancing in a green transition will require according to the OECD additional public and private investments that contribute to an increase of 3 p.p in the value added of green sectors. This can potentially add 10.5% more net jobs in LAC by 2030. Ensuring universal access is crucial for green and just transition as 17 million people still have no access to electricity in the region. Investing further in renewable can substantially reduce GHG emissions while also providing lower-cost power and for some LAC countries, reducing reliance on imported fossil fuel products (while Brazil generates 84% of its electric power from renewables, Jamaica relies on imported oil derivatives for 87% of its electricity generation).
- Additionally, green transition can be the cornerstone of a new sustainable social contract: 68% of citizens in the region see climate change as a very serious threat to their country in the next 20 years, a level higher than in other regions.
- LAC is well-placed to embark on an effective green transition and should be a relevant player in climate negotiation: Having 50% of the world’s biodiversity and having at present 33% of total energy supply in the region from renewable resources, compared to just 13% globally make many LAC countries key players in international climate negotiations where international private and public cooperation will be key to advance in the green and just transition.