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Energy Transition in Latin America:

Opportunities and Challenges

With Guillermo Bolinaga and Francisco J. Monaldi
guillermo-bolinaga
guillermo-bolinaga
logo-radar-opportunitas-eng-rec

Energy Transition in Latin America:

Opportunities and Challenges

With Guillermo Bolinaga and Francisco J. Monaldi
guillermo-bolinaga
guillermo-bolinaga
Opportunitas Advisors
January 22, 2024
Opportunitas Advisors launches its podcast “Radar Opportunitas,” to discuss trends in risk, strategy, and public policies in Latin America. In the first episode, Guillermo Bolinaga, founding partner of the firm, speaks with Francisco Monaldi, economist, senior advisor at Opportunitas Advisors, and director of the Energy Program for Latin America at the Baker Institute’s Center for Energy Studies at Rice University. They delve into the future of energy transition in Latin America, its potential, and the challenges it faces.

Energy Transition in Latin America: Opportunities and Challenges

Energy transition is a crucial process for the future of Latin America. The region has significant potential to be a global leader in this transition, thanks to the abundance of renewable resources and critical minerals. However, it also faces challenges that must be overcome to maximize this potential, such as lack of investment, deforestation, and resistance from the sector.

In this episode, they explore this process and the role of the private sector.

Monaldi explains that the region has the world’s second-largest fossil fuel reserves after the Middle East, and despite not reaching its full potential, there has been a significant increase due to production growth in Brazil and Guyana. This increasing trend is expected to continue over the next 10 years.

Professor Monaldi points out that, due to energy transition, some countries will be impacted by the global decline in fossil fuel demand. However, others will benefit from the supply of critical minerals essential for electrification, such as Chile, Bolivia, Argentina, Peru, and Brazil. Monaldi emphasizes that “countries with better institutional quality will fare much better in the energy transition because it requires a sophisticated level of regulations, institutions, credibility in public policies, etc.”

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Monaldi argues that investments in renewable energies involve a highly regulated sector with relatively modest returns. Considering Latin America’s historical struggle to charge energy at the required price, the region will face greater difficulties in attracting significant investments.

Finally, Professor Monaldi is asked about the role of the private sector in energy transition. In his opinion, the private sector will play a fundamental role as the primary investor in critical minerals and renewables. He highlights the importance of ESG (Environmental, Social, Governance) issues, governance, environment, etc., especially for publicly traded companies and those seeking access to international markets. Additionally, Monaldi emphasizes the preparedness that companies must have for energy transition, stating that they “must work to ensure that governments understand the regulatory frameworks that will make the sector’s development possible” and work on “training their personnel and public officials so that this complex matter can be developed in a way that does not generate significant problems for the sector but can achieve its objectives.”

Do you want to know who the main winners and losers of the energy transition in Latin America will be? And what are the main regulatory and political risks associated with the energy transition? To find answers to these questions and more details on how our expert envisions the development of energy transition in Latin America and how companies can anticipate and prepare for the changes involved in this process, listen to the episode of Radar Opportunitas available in Spotify, Apple Podcast, Google Podcasts, and Apple Music.

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