Despite its leadership in clean energy, AL is not ready for the transition: WEF

Although Latin America and the Caribbean have advantages for generating renewable energy, these benefits have not translated into consistent preparation for the energy transition, according to a report from the World Economic Forum (WEF).

The report from the WEF Energy and Materials Center indicates that the region is at a crucial moment, since its solar, wind and hydroelectric potential is of the first order, and renewable energies already supply around an average of 70 percent of its electricity, although the proportion is higher in countries such as Brazil and Uruguay.

Biofuel use is double the global average, and Latin America plays a critical role in supplying the critical minerals that drive clean technologies.

“However, these advantages have not yet translated into consistent preparation for the transition.”

According to the Energy Transition Readiness Assessment (ETRA) 2025, “despite favorable conditions, the region’s energy transition still faces significant challenges.”

The organization notes that Latin America and the Caribbean rank third among the six regions of the world in the 2025 Energy Transition Index, but remains below the global average.

He highlighted that many economies in the region still have a double dependency, as they export fossil fuels and minerals, but also import refined fuels and gas. This situation “makes them vulnerable to price volatility and supply chain disruptions.”

He pointed out that in Latin America and the Caribbean, infrastructure is a critical limitation, as it registers transmission and distribution losses of 13.5 percent, higher than the world average of 10.2 percent. In addition, they have obsolete networks and limited interconnections that restrict the integration of renewable energies.

He pointed out that financing is another barrier, since investment in clean energy in 2025 was 70 billion dollars, which is equivalent to 4 percent of global transition capital.

The report indicates that the region needs $150 billion annually by 2030, but high capital costs and macroeconomic risks slow progress. He highlighted that only one in four countries made progress in energy security, equity and sustainability, showing fragmented progress and policy divergence.

The report considers that to move forward, the region requires governments to adopt stable and integrated political frameworks. Long-term commitments attract investment and innovation, as seen in countries such as Uruguay and Costa Rica.

It must also modernize its energy infrastructure. “Updating transmission, storage and digital systems will be essential to boost renewable capacity and improve grid resilience,” he concluded.