Latin America is making tangible progress in reducing carbon emissions and transitioning to more sustainable energy sources, yet the region still faces significant challenges in aligning with global climate objectives, according to a new report by Wood Mackenzie titled “Benchmarking Latin America Energy Markets.”
The analysis focuses on the six largest Latin American economies by GDP — Brazil, Mexico, Argentina, Colombia, Chile, and Peru — all of which are showing varied levels of advancement in decarbonization. These countries share key structural traits such as heavy reliance on fossil fuels and mineral exports, rising urbanization, and growing energy consumption, noted Gerardo Bocard, Research Analyst at Wood Mackenzie.
Fossil Fuels Still Dominate, but Decline Underway
Despite their central role in energy supply, fossil fuels are gradually being phased down across the region. Brazil is making the most headway, with fossil fuel usage projected to fall to 49% by 2050. In contrast, Mexico remains significantly dependent, with fossil fuels expected to decline only modestly from 95% to 86% over the same period.
Chile Leads in Renewable Energy Expansion
Renewable energy adoption is surging across the region, with Chile emerging as a regional leader. By the end of 2024, 70% of Chile’s electricity came from renewable sources, positioning the country at the forefront of clean energy transformation in Latin America.
Elsewhere, Brazil and Colombia have increased their reliance on hydropower, while nuclear energy remains limited to Mexico, Argentina, and Brazil. Solar, wind, and biofuels are expanding significantly, tapping into the region’s abundant natural resources.
Green Hydrogen and CCUS Projects Gain Momentum
The report highlights a growing interest in green hydrogen and carbon capture, utilisation and storage (CCUS) technologies. Across Latin America, 167 low-carbon hydrogen and 58 CCUS projects have been announced. Brazil leads with 43 projects, including 24 million tonnes of CCUS capacity in operation and another 11.5 million tonnes under development.
Currently, 82 green hydrogen projects are active, mainly concentrated in Chile, Brazil, and Argentina, with many others in the pipeline at various stages of development.
Path Ahead Requires Coordinated Action
“These developments highlight the diverse approaches taken by different countries,” said Bocard. “Some benefit from large domestic markets, while others depend heavily on commodity imports and exports.”
Despite the promising momentum, Bocard emphasized that collaborative strategies, targeted policy frameworks, and robust investment will be essential for the region to meet its net-zero ambitions and build a resilient and sustainable energy future.
