Population and economic growth
The current global population stands at 7 billion people and, according to the United Nations, it is projected to reach 9 billion by 2030. Also, in the last two decades, the world has witnessed an important reduction in the level of poverty, with the percentage of the population living with less than 1.25 dollar PPP per day going down from 43.1 per cent in 1990 to 20.6 per cent in 2010. Today, 623 million people (less than 10 percent of the world population) live in the Latin American and Caribbean Region (LAC), and this number is expected to increase by another 100 million by 2030.
Also, between 2000 and 2010 LAC witnessed a sharp reduction in the poverty level from 45 to 30 per cent, and the middle class in the region grew from 20 to 28 per cent. However, 34 million people still lack access to electricity and 85 million people have no access to modern cooking facilities.
Energy consumption
Improvements in living conditions and the rise in population have put significant pressure on energy demand. Since the industrial revolution, energy consumption has increased by more than 20 times, with a rise in the use of fossil fuels and, more recently, of other energy sources (e.g., renewable energies).
By the end of 2012, 87 per cent of the world’s primary energy source was fossil fuels, of which 33 per cent was oil, 30 coal and 24 per cent natural gas; renewable energy sources accounted for 9 per cent, of which 7 per cent was generated by large hydropower plants and 2 per cent by small hydropower plants, wind, solar, geothermal and biofuels, while the remaining was nuclear power. In the last two centuries, the increase in energy consumption took place mostly in those countries that today are the developed ones, mainly OECD countries.
At the end of the 20th century, they accounted for 55 per cent of the world energy consumption, 19 per cent of the world population, and 60 per cent of the global GDP. But in the last two decades, this pattern has been shifting, and rapidly. According to the Energy Information Administration (EIA), energy consumption is expected to grow 20 per cent by 2020, 39 per cent by 2030, and 56 per cent by 2040. Also, non-OECD countries, where energy consumption has grown more than 65 per cent since 2000 and is expected to continue growing at a fast pace, will account for most of the global energy consumption.
In the LAC region, per capita electricity consumption is less than 1/2 the average consumption of EU member countries, 1/3 of OECD countries, and 1/5 of the U.S., which highlights the room that exists in the region for additional increases in energy consumption as economic growth continues.
Primary energy consumption in the region is expected to grow by 50 per cent in 2030 and electricity demand by more than 80 per cent. To cope with this growing demand, for example, an average of 20 GW of new generation capacity per year will be needed until 2030. The LAC region has enough resources to meet its own energy needs as well as to cater for other regions’. However, this will require sizeable investments to unlock the region’s full potential.
Regional energy resources
The LAC region holds 21 per cent of the world proven oil reserves with Venezuela accounting for 18.2 per cent of world oil reserves and being the country with the largest oil reserves in the world. Brazil has the second-largest proven oil reserves in Latin America (0.80 per cent of world reserves), followed by Mexico (0.63 per cent of world reserves). In 2012, Brazil and Mexico ranked fifteenth and eighteenth among the countries with the largest oil reserves. Both countries have the greatest prospects for a substantial increase in oil production. Ecuador, Argentina, Colombia and Peru have smaller resources, totaling 0.85 per cent of the world oil reserves.
As for other fossil fuels, the LAC region represents much smaller percentages of world proved reserves (4 per cent of global natural gas reserves and 1.6 per cent of global coal reserves). Venezuela also holds the largest natural gas reserves in the region (68 per cent of regional reserves), followed by Mexico (6 per cent), Brazil (4.9 per cent), Trinidad and Tobago (4.6 per cent), Peru (4.4 per cent), Argentina (4.1 per cent), and Bolivia (3.5 per cent). The discoveries of large pre-salt oil deposits in the offshore Campos and Santos basins could transform Brazil into one of the largest oil producers in the world. The relevance of these discoveries was emphasized by both former President Luiz Inácio Lula da Silva - who described them as “a second independence for Brazil” - and current President Dilma Rousseff - who referred to them as “our passport to the future”.
According to the International Energy Agency (IEA), the country has recoverable resources of 106 billion barrels, of which only 14 per cent are proven reserves. IEA foresees Brazil joining the ranks of the ten largest global oil producers by 2015 and becoming the sixth largest oil producer in 2035, when oil production is projected to increase to 6 million barrels per day from 2.15 million barrels per day in 2012. More than half of Brazil’s production is expected to be exported.
In Mexico, the recent constitutional amendment to open the energy sector to private participation, after 75 years of monopoly control of the country’s oil and gas reserves by state-owned Petróleos Mexicanos (Pemex), offers renewed prospects for the industry. As Mexican President Peña Nieto stated, “this profound reform can lift the standards of living for all Mexicans”. By the end of 2012, Pemex registered 13.8 billion barrels of proven oil reserves, a figure that goes up to 43.8 billion barrels if probable and possible reserves are factored in.
The approval of the constitutional amendment and the subsequent publication of the secondary laws, pending for approval, will enable foreign investors to partner with Pemex. It is expected that Pemex will aim to retain shallow-water production and look for partners to enhance oil recovery and deepwater projects. Apart from conventional oil and gas reserves, the region has important shale oil and gas resources. The EIA estimates that 21.7 per cent of global shale oil reserves are in the LAC region (i.e., 73 billion out of 335 billion barrels).Argentina holds 8 per cent of these reserves, while Venezuela and Mexico account for 3.9 per cent each.
Also, EIA estimates the global shale gas reserves at more than 220 Tcm, 25 per cent of which is in the LAC region. Argentina has 22,7 Tcm (10.3 per cent), followed by Mexico with 15.4 Tcm (7 per cent) and Brazil with 6.9 Tcm (3 per cent). LAC is the region with the largest share of renewable energy sources as percentage of its primary energy matrix (30 per cent compared to 13 per cent of world average), with a large potential for renewable sources such as hydro power, wind, solar, geothermal, biofuels and biomass.
The percentage of renewable is even larger in power generation, reaching almost 55 per cent, where 49 per cent are large hydro, and above the world average percentage of renewable in power generation that reaches 11 per cent. Only 1/3 of the LAC region’s hydropower generation potential has been developed (in 2012, hydropower generated 72 per cent of the electricity supply in Brazil, 75 per cent in Colombia, and almost 100 per cent in Paraguay). Brazil is the second world producer of ethanol and biodiesel for road transportation (23 per cent of world production), behind the United States (54 per cent). In Brazil, biofuels represents almost 20 per cent of all fuels used in the transport sector. Renewable energy sources are projected to play an increasing role in the region’s energy matrix.
Nuclear power represents a small percentage of LAC power generation capacity (only 1.4 per cent), with nuclear power plants in Argentina, Brazil and Mexico. New developments in other countries in the region came to a halt after the Fukushima disaster.
Main challenges
Among the main challenges the region faces to cope with a growing energy demand are:
Global warming and greenhouse gases (GHG) are one of the biggest concerns for the development of the energy sector. The sector is the source of two thirds of global GHG emissions, and for fossil fuels this defines a more restrictive environment. According to the IEA World Energy Outlook 2013, CO2 emissions are expected to rise by 20 per cent to 37.2 Gt in 2035, while oil use will continue trending upward. Between 2000 and 2012, CO2 emissions associated with fossil fuels consumption increased 36 per cent, mainly caused by increased coal consumption in China. In fact, China has become the largest emitter of GHG, accounting for 26.7 per cent of global CO2 emissions in 2012, and responsible for 66 per cent of total increase in CO2emissions between 2000 and 2012. Although non-OECD countries are projected to account for an increasing share of CO2emissions, they are expected to represent only half of OECD per capita levels in 2035.
LAC’s energy sector is responsible for only 6 per cent of GHG annual emissions, a figure that goes up to 13 per cent if deforestation and agriculture are taken into account. The widespread use of clean energy produced by hydroelectric plants explains the relatively low level of emissions. Nonetheless, according to the World Bank (Low Carbon, High Growth: Latin American Responses to Climate Change) this may change over the next 25 years as the transport and manufacturing sectors grow.
If current regional trends for energy consumption continue, CO2 emissions can increase by an estimated 33 per cent per capita (above the global average of 24 per cent) by 2030. Aware of this risk, the countries have been implementing measures to curb CO2 emissions (e.g., stricter environmental standards, higher percentages of renewable sources in the energy matrix, creation of favorable conditions for the development of renewable sources), and this trend is expected to continue.
A second challenge for the energy sector is higher social and environmental standards demanded by the civil society. Today, social networks play a key role in empowering and connecting people. This has had an impact on the development and implementation of energy projects. A more active dialogue with the local communities is required in the preliminary stages of project development to better understand the impact of projects on the community and determine appropriate mitigation measures. Plans to build hydropower plants in Brazil and Chile, for example, have faced delays due to concerns raised by indigenous people and local communities.
A third challenge for the energy sector is the depletion of natural resources and new technological developments, which will continue to reshape the energy industry. In the last decades, depletion of natural resources, such as conventional oil fields, and the search for greater energy security and alternative and cleaner energy sources, have led to the development of new exploration and extraction technologies, as well as the development of renewable sources such as solar, wind, geothermal, and biofuels, among others.
LAC was not impervious to this trend. Brazil has become the world leader in deepwater oil production, with promising prospects with the discoveries of large pre-salt oil deposits in the offshore of the Campos and Santos basin. But the biggest most recent technological developments have led to the shale oil and gas revolution in the U.S. How fast these technological developments can reshape the energy industry will depend on the speed at which they unlock energy resources in the LAC and other regions of the world. Today, 40 per cent of the U.S. gas production comes from shale gas. Innovation and technological advances are game changers, and LAC faces the challenge of taking advantage of new innovations or running the risk of lagging behind.
A fourth challenge for LAC is the low level of energy integration that exists within the region. This is a serious drawback that prevents the region from taking advantage of the huge complementarities in the sector. The region has vast fossil and renewable energy resources to meet its energy needs as well as cater for the ever-increasing global energy demands.
Energy resources are unevenly distributed among the countries, and the region lacks the institutional and physical infrastructure needed to facilitate energy trade across borders. One of the key hurdles to overcome is the historical distrust that has prevented the countries from building the institutional framework that is a prerequisite to mobilize investments in exploration, production and transportation. Moving ahead with wider regional energy integration will bring huge dividends in terms of wealth creation, regional competitiveness, as well as fiscal balances.
A fifth challenge for the region is attracting foreign investments for large-scale projects with long-term implementation and repayment periods. The region has a wide array of business models, with the private sector being the main player in some countries (e.g., Chile), while in others the industry is controlled by large state-owned enterprises.
The investments needed to develop the sector in the region are vast (i.e., at least US dollars 50 billion for the 20 GW of additional generation capacity per year needed until 2030; US dollars 50 billion annually for the next five years required to develop the pre-salt oil resources in Brazil; US dollars 40 billion needed per year for the revival of Mexico’s oil industry). There is no single government in the region capable of financing these investments, and it is necessary to mobilize resources from the private sector to fill the sizable gap. Creating an enabling business environment is crucial to attract the level of investment necessary to develop the sector to its fullest potential.
A sixth challenge for the region is the widespread use of energy subsidies. Fossil-fuel subsidies are widespread worldwide, and LAC is no exemption. Subsidies cost the government US dollars 27 billion in Venezuela, US dollars 16 billion in Mexico, US dollars 10 billion in Argentina, and US dollars 6 billion in Ecuador. Venezuela also provides subsidized oil to Central America and the Caribbean countries, allowing them to repay 40 to 60 per cent of their imports over 25 years at low interest rates. As a result, the external debt of some of these countries accounts for as much as 50 per cent of their GDP. Energy subsidies distort energy prices, have adverse effects on investment incentives, and put huge pressure on fiscal sustainability. However, removing energy subsidies is a very sensitive issue for regional governments. While a sudden removal could severely impact the economy and create political and social unrest, a phased approach to gradually adjust energy prices while offering targeted support to vulnerable groups could help cushion the impact of the move.
There needs to be a push on innovation and productivity improvements in all parts of the economy to counter some of the increase in the fuel price on general prices. Governments could also embark on policies to encourage more efficient behavior on the part of consumers. Withdrawing subsidies for consumer heavy sectors while retaining them in other industrial sectors could help soften the initial blow of rising costs.
The role for multilateral development agencies
It is clear that despite all its potential, the region is confronted with major challenges and attractive opportunities to further develop its energy sector and turn it into a source of wealth, new jobs, and better living standards for the society as a whole. Multilateral development agencies, like the World Bank Group or the Inter-American Development Bank, are well positioned and have extensive knowledge and expertise to help the region handle the development and implementation of regional projects and overcome the aforementioned challenges and by improving institutional frameworks, creating an enabling business environment, building and enhancing institutional capacity, increasing access to financial markets, phasing out energy subsidies, improving fiscal sustainability, and catalyzing the foreign investment needed to develop the industry.
The current global population stands at 7 billion people and, according to the United Nations, it is projected to reach 9 billion by 2030. Also, in the last two decades, the world has witnessed an important reduction in the level of poverty, with the percentage of the population living with less than 1.25 dollar PPP per day going down from 43.1 per cent in 1990 to 20.6 per cent in 2010. Today, 623 million people (less than 10 percent of the world population) live in the Latin American and Caribbean Region (LAC), and this number is expected to increase by another 100 million by 2030.
Also, between 2000 and 2010 LAC witnessed a sharp reduction in the poverty level from 45 to 30 per cent, and the middle class in the region grew from 20 to 28 per cent. However, 34 million people still lack access to electricity and 85 million people have no access to modern cooking facilities.
Energy consumption
Improvements in living conditions and the rise in population have put significant pressure on energy demand. Since the industrial revolution, energy consumption has increased by more than 20 times, with a rise in the use of fossil fuels and, more recently, of other energy sources (e.g., renewable energies).
By the end of 2012, 87 per cent of the world’s primary energy source was fossil fuels, of which 33 per cent was oil, 30 coal and 24 per cent natural gas; renewable energy sources accounted for 9 per cent, of which 7 per cent was generated by large hydropower plants and 2 per cent by small hydropower plants, wind, solar, geothermal and biofuels, while the remaining was nuclear power. In the last two centuries, the increase in energy consumption took place mostly in those countries that today are the developed ones, mainly OECD countries.
At the end of the 20th century, they accounted for 55 per cent of the world energy consumption, 19 per cent of the world population, and 60 per cent of the global GDP. But in the last two decades, this pattern has been shifting, and rapidly. According to the Energy Information Administration (EIA), energy consumption is expected to grow 20 per cent by 2020, 39 per cent by 2030, and 56 per cent by 2040. Also, non-OECD countries, where energy consumption has grown more than 65 per cent since 2000 and is expected to continue growing at a fast pace, will account for most of the global energy consumption.
In the LAC region, per capita electricity consumption is less than 1/2 the average consumption of EU member countries, 1/3 of OECD countries, and 1/5 of the U.S., which highlights the room that exists in the region for additional increases in energy consumption as economic growth continues.
Primary energy consumption in the region is expected to grow by 50 per cent in 2030 and electricity demand by more than 80 per cent. To cope with this growing demand, for example, an average of 20 GW of new generation capacity per year will be needed until 2030. The LAC region has enough resources to meet its own energy needs as well as to cater for other regions’. However, this will require sizeable investments to unlock the region’s full potential.
Regional energy resources
The LAC region holds 21 per cent of the world proven oil reserves with Venezuela accounting for 18.2 per cent of world oil reserves and being the country with the largest oil reserves in the world. Brazil has the second-largest proven oil reserves in Latin America (0.80 per cent of world reserves), followed by Mexico (0.63 per cent of world reserves). In 2012, Brazil and Mexico ranked fifteenth and eighteenth among the countries with the largest oil reserves. Both countries have the greatest prospects for a substantial increase in oil production. Ecuador, Argentina, Colombia and Peru have smaller resources, totaling 0.85 per cent of the world oil reserves.
As for other fossil fuels, the LAC region represents much smaller percentages of world proved reserves (4 per cent of global natural gas reserves and 1.6 per cent of global coal reserves). Venezuela also holds the largest natural gas reserves in the region (68 per cent of regional reserves), followed by Mexico (6 per cent), Brazil (4.9 per cent), Trinidad and Tobago (4.6 per cent), Peru (4.4 per cent), Argentina (4.1 per cent), and Bolivia (3.5 per cent). The discoveries of large pre-salt oil deposits in the offshore Campos and Santos basins could transform Brazil into one of the largest oil producers in the world. The relevance of these discoveries was emphasized by both former President Luiz Inácio Lula da Silva - who described them as “a second independence for Brazil” - and current President Dilma Rousseff - who referred to them as “our passport to the future”.
According to the International Energy Agency (IEA), the country has recoverable resources of 106 billion barrels, of which only 14 per cent are proven reserves. IEA foresees Brazil joining the ranks of the ten largest global oil producers by 2015 and becoming the sixth largest oil producer in 2035, when oil production is projected to increase to 6 million barrels per day from 2.15 million barrels per day in 2012. More than half of Brazil’s production is expected to be exported.
In Mexico, the recent constitutional amendment to open the energy sector to private participation, after 75 years of monopoly control of the country’s oil and gas reserves by state-owned Petróleos Mexicanos (Pemex), offers renewed prospects for the industry. As Mexican President Peña Nieto stated, “this profound reform can lift the standards of living for all Mexicans”. By the end of 2012, Pemex registered 13.8 billion barrels of proven oil reserves, a figure that goes up to 43.8 billion barrels if probable and possible reserves are factored in.
The approval of the constitutional amendment and the subsequent publication of the secondary laws, pending for approval, will enable foreign investors to partner with Pemex. It is expected that Pemex will aim to retain shallow-water production and look for partners to enhance oil recovery and deepwater projects. Apart from conventional oil and gas reserves, the region has important shale oil and gas resources. The EIA estimates that 21.7 per cent of global shale oil reserves are in the LAC region (i.e., 73 billion out of 335 billion barrels).Argentina holds 8 per cent of these reserves, while Venezuela and Mexico account for 3.9 per cent each.
Also, EIA estimates the global shale gas reserves at more than 220 Tcm, 25 per cent of which is in the LAC region. Argentina has 22,7 Tcm (10.3 per cent), followed by Mexico with 15.4 Tcm (7 per cent) and Brazil with 6.9 Tcm (3 per cent). LAC is the region with the largest share of renewable energy sources as percentage of its primary energy matrix (30 per cent compared to 13 per cent of world average), with a large potential for renewable sources such as hydro power, wind, solar, geothermal, biofuels and biomass.
The percentage of renewable is even larger in power generation, reaching almost 55 per cent, where 49 per cent are large hydro, and above the world average percentage of renewable in power generation that reaches 11 per cent. Only 1/3 of the LAC region’s hydropower generation potential has been developed (in 2012, hydropower generated 72 per cent of the electricity supply in Brazil, 75 per cent in Colombia, and almost 100 per cent in Paraguay). Brazil is the second world producer of ethanol and biodiesel for road transportation (23 per cent of world production), behind the United States (54 per cent). In Brazil, biofuels represents almost 20 per cent of all fuels used in the transport sector. Renewable energy sources are projected to play an increasing role in the region’s energy matrix.
Nuclear power represents a small percentage of LAC power generation capacity (only 1.4 per cent), with nuclear power plants in Argentina, Brazil and Mexico. New developments in other countries in the region came to a halt after the Fukushima disaster.
Main challenges
Among the main challenges the region faces to cope with a growing energy demand are:
- global warming;
- higher social and environmental standards demanded by civil society;
- depletion of natural resources and technological advances;
- geopolitical issues and lack of regional integration;
- lack of a common business model and access to financial markets;
- energy subsidies.
Global warming and greenhouse gases (GHG) are one of the biggest concerns for the development of the energy sector. The sector is the source of two thirds of global GHG emissions, and for fossil fuels this defines a more restrictive environment. According to the IEA World Energy Outlook 2013, CO2 emissions are expected to rise by 20 per cent to 37.2 Gt in 2035, while oil use will continue trending upward. Between 2000 and 2012, CO2 emissions associated with fossil fuels consumption increased 36 per cent, mainly caused by increased coal consumption in China. In fact, China has become the largest emitter of GHG, accounting for 26.7 per cent of global CO2 emissions in 2012, and responsible for 66 per cent of total increase in CO2emissions between 2000 and 2012. Although non-OECD countries are projected to account for an increasing share of CO2emissions, they are expected to represent only half of OECD per capita levels in 2035.
LAC’s energy sector is responsible for only 6 per cent of GHG annual emissions, a figure that goes up to 13 per cent if deforestation and agriculture are taken into account. The widespread use of clean energy produced by hydroelectric plants explains the relatively low level of emissions. Nonetheless, according to the World Bank (Low Carbon, High Growth: Latin American Responses to Climate Change) this may change over the next 25 years as the transport and manufacturing sectors grow.
If current regional trends for energy consumption continue, CO2 emissions can increase by an estimated 33 per cent per capita (above the global average of 24 per cent) by 2030. Aware of this risk, the countries have been implementing measures to curb CO2 emissions (e.g., stricter environmental standards, higher percentages of renewable sources in the energy matrix, creation of favorable conditions for the development of renewable sources), and this trend is expected to continue.
A second challenge for the energy sector is higher social and environmental standards demanded by the civil society. Today, social networks play a key role in empowering and connecting people. This has had an impact on the development and implementation of energy projects. A more active dialogue with the local communities is required in the preliminary stages of project development to better understand the impact of projects on the community and determine appropriate mitigation measures. Plans to build hydropower plants in Brazil and Chile, for example, have faced delays due to concerns raised by indigenous people and local communities.
A third challenge for the energy sector is the depletion of natural resources and new technological developments, which will continue to reshape the energy industry. In the last decades, depletion of natural resources, such as conventional oil fields, and the search for greater energy security and alternative and cleaner energy sources, have led to the development of new exploration and extraction technologies, as well as the development of renewable sources such as solar, wind, geothermal, and biofuels, among others.
LAC was not impervious to this trend. Brazil has become the world leader in deepwater oil production, with promising prospects with the discoveries of large pre-salt oil deposits in the offshore of the Campos and Santos basin. But the biggest most recent technological developments have led to the shale oil and gas revolution in the U.S. How fast these technological developments can reshape the energy industry will depend on the speed at which they unlock energy resources in the LAC and other regions of the world. Today, 40 per cent of the U.S. gas production comes from shale gas. Innovation and technological advances are game changers, and LAC faces the challenge of taking advantage of new innovations or running the risk of lagging behind.
A fourth challenge for LAC is the low level of energy integration that exists within the region. This is a serious drawback that prevents the region from taking advantage of the huge complementarities in the sector. The region has vast fossil and renewable energy resources to meet its energy needs as well as cater for the ever-increasing global energy demands.
Energy resources are unevenly distributed among the countries, and the region lacks the institutional and physical infrastructure needed to facilitate energy trade across borders. One of the key hurdles to overcome is the historical distrust that has prevented the countries from building the institutional framework that is a prerequisite to mobilize investments in exploration, production and transportation. Moving ahead with wider regional energy integration will bring huge dividends in terms of wealth creation, regional competitiveness, as well as fiscal balances.
A fifth challenge for the region is attracting foreign investments for large-scale projects with long-term implementation and repayment periods. The region has a wide array of business models, with the private sector being the main player in some countries (e.g., Chile), while in others the industry is controlled by large state-owned enterprises.
The investments needed to develop the sector in the region are vast (i.e., at least US dollars 50 billion for the 20 GW of additional generation capacity per year needed until 2030; US dollars 50 billion annually for the next five years required to develop the pre-salt oil resources in Brazil; US dollars 40 billion needed per year for the revival of Mexico’s oil industry). There is no single government in the region capable of financing these investments, and it is necessary to mobilize resources from the private sector to fill the sizable gap. Creating an enabling business environment is crucial to attract the level of investment necessary to develop the sector to its fullest potential.
A sixth challenge for the region is the widespread use of energy subsidies. Fossil-fuel subsidies are widespread worldwide, and LAC is no exemption. Subsidies cost the government US dollars 27 billion in Venezuela, US dollars 16 billion in Mexico, US dollars 10 billion in Argentina, and US dollars 6 billion in Ecuador. Venezuela also provides subsidized oil to Central America and the Caribbean countries, allowing them to repay 40 to 60 per cent of their imports over 25 years at low interest rates. As a result, the external debt of some of these countries accounts for as much as 50 per cent of their GDP. Energy subsidies distort energy prices, have adverse effects on investment incentives, and put huge pressure on fiscal sustainability. However, removing energy subsidies is a very sensitive issue for regional governments. While a sudden removal could severely impact the economy and create political and social unrest, a phased approach to gradually adjust energy prices while offering targeted support to vulnerable groups could help cushion the impact of the move.
There needs to be a push on innovation and productivity improvements in all parts of the economy to counter some of the increase in the fuel price on general prices. Governments could also embark on policies to encourage more efficient behavior on the part of consumers. Withdrawing subsidies for consumer heavy sectors while retaining them in other industrial sectors could help soften the initial blow of rising costs.
The role for multilateral development agencies
It is clear that despite all its potential, the region is confronted with major challenges and attractive opportunities to further develop its energy sector and turn it into a source of wealth, new jobs, and better living standards for the society as a whole. Multilateral development agencies, like the World Bank Group or the Inter-American Development Bank, are well positioned and have extensive knowledge and expertise to help the region handle the development and implementation of regional projects and overcome the aforementioned challenges and by improving institutional frameworks, creating an enabling business environment, building and enhancing institutional capacity, increasing access to financial markets, phasing out energy subsidies, improving fiscal sustainability, and catalyzing the foreign investment needed to develop the industry.
©nuovaenergia
*This paper has been published in Nuova Energia: Il periodico dello sviluppo sostenible
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