Latin America set to be leaders in renewables

Climate change is already making itself known around the world.

In Summary
  • Brazil, Mexico, Chile, Columbia, and Argentina are generating the highest volume of renewable energy, most of which include solar and wind power.
  • Oil and gas investments just haven’t been performing as strongly for serious investors for the past decade.
Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm on the desert road of Suez outside of Cairo, Egypt, on September 1, 2020.
Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm on the desert road of Suez outside of Cairo, Egypt, on September 1, 2020.
Image: REUTERS

Anyone who’s been paying attention over the past few decades realises how wild and unpredictable the weather has become. Scientists refer to this as the impact of global warming, or, to quote a more politically correct term these days: climate change.

The increased severity of weather events, including wildfires, record-setting heatwaves, and now record-shattering hurricanes activity in the Atlantic and Gulf of Mexico were all predicted years ago. In fact, meteorologist Art Bell and Whitley Strieber wrote about these events in their 1999 book, The Coming Global Superstorm, which inspired the hit movie The Day After Tomorrow. In it, stronger storms, more enduring droughts and record-breaking weather events were all predicted.

Which brings us to the primary cause, fossil fuels. The more oil and gas that is burnt, the more carbon dioxide is pumped into the atmosphere. This has what is referred to as the ‘greenhouse’ effect on the atmosphere. The carbon dioxide traps the sun’s heat reflecting off the surface of the earth, raising global temperatures, which increases ocean water temperatures, which is having dramatic effects on weather patterns around the world.

Many activists have long touted renewable energy as an alternative to fossil fuels. The spirited activists are calling on their local and national governments to step up and make a difference by focusing on alternative fuels.

Fortunately, even though some of the biggest world superpowers remain obstinately stubborn and unwilling to upset major oil companies, some countries are stepping up and making a difference as they move to cleaner, renewable energy.

One of those regions, surprisingly, is Latin America. In fact, Latin American countries are producing some of the largest growth rates of renewable energy in the world. Auctions on energy produced by renewable sources have already expanded and it’s expected that energy production will jump from an already impressive 49 gigawatts (GW) to 123 by 2025.

The price of energy produced in Latin America has also been dropping, which is inspiring more nations to get in on the auction to purchase from these sources. Mexico had been a strong player in producing renewables, but recent political turmoil is throwing its future into some doubt. Still, that won’t curtail the spread and growth of renewable energy in this region of the world.

Brazil, Mexico, Chile, Columbia, and Argentina are generating the highest volume of renewable energy, most of which include solar and wind power. The biggest investors of renewables in Latin America are European companies. This is helping these smaller economies become more economically viable and stronger.

All these efforts are, in fact, bringing renewable energy to another level, lifting it up from a kind of novelty as some sceptics have viewed it in the past, to a viable alternative to fossil fuels and giving the world some measure of hope that we could all, finally, one day step away from the environmentally destructive fossil fuels.

A growing force of major investors around the world have had their eye on renewable energy for years. Even more so now, as oil and gas prices remain suppressed by about 30 percent due to the global Covid-19 pandemic and travel restrictions. Because of this, there has been renewed interest in alternative energy sources.

For developing countries, there has been more interest and investment in renewable resources. In fact, according to DWS’s senior environmental social and corporate governance strategist Murray Birt, “Developing countries’ renewable investment exceeded the level in developed countries for the first time in 2015.”

But it’s not just recent Covid-19 events that have caused these changes. Oil and gas investments just haven’t been performing as strongly for serious investors for the past decade.

However, investors may still see renewable energy as a risky endeavour due to a number of factors, but those who are seeing the prospective potential more clearly are enjoying a strong return on their investments, and smaller, more developing nations are reaping the benefits.

Since they can receive outside investment on energy production and begin to rely less on the traditional fossil fuels, this provides smaller nations with a platform upon which to build their economies. As more nations turn to renewable energy, they will likely purchase from these developing resources, helping to bolster financial strength for smaller countries.

Climate change is already making itself known around the world. While some may continue to argue that it’s just not real, one need only pay attention to the major and sometimes catastrophic events unfolding, seemingly in more rapid succession of late, to know the truth: it’s here.

The international community should look to regions like Latin America as resources to build up more renewable energy resources. This will not only strengthen developing nations but help the world steer away from destructive fossil fuels and embrace renewables with more fervour and passion.