How to Unlock the Highway of Development in Latin America
Blessed with abundant natural resources, Latin American countries are positioned to play a pivotal role in the energy transition. For Issue 4, 2024 of Breakbulk Magazine, Pablo Hanacek, head of industrial projects at DHL Global Forwarding Argentina, takes a sharp look at how the region can harness its potential.
Latin America is moving towards the future with new energy. The global trend towards decarbonizing the economy and transitioning to an energy matrix with a greater abundance of renewables places the region at center stage.
The world will demand the natural resources that abound in this part of the world, such as wind, solar, hydro energy and key metals like copper, nickel and lithium.
Opportunities are multiplying. In a survey conducted by BNamericas, 57% of the executives consulted indicated that they will increase their spending on decarbonization. Solar energy (59%) and wind energy (18%) are the two that will grow the fastest in the next five years.
Additionally, it identified 322 solar and wind projects scheduled to enter the construction stage during 2024, which will add 43GW to the region’s power generation capacity.
Latin American countries will benefit from a diversification of their export matrix, the development of innovative technologies, and some will become more independent of the hydrocarbons that are currently imported. The environmental impact of most of these projects is under evaluation and everything indicates that the green light will be given gradually as legal frameworks are defined.
Green hydrogen, a field in which Latin America is at the forefront, is another pillar of decarbonization. The region has access to both oceans, allowing direct maritime routes to European and Asian markets, where demand is expected to grow exponentially.
Additionally, almost 60% of the installed capacity in Latin America comes from renewable energies, which is an advantage both in availability and costs for producing green hydrogen.
Historical Deficits and New Challenges
A historical deficit remains unresolved: infrastructure, including the transmission capacity of electrical systems. The solution seems to lie in new battery storage technologies, however the topic, with the exception of Chile, is still very new in the region.
On the other hand, the future scarcity of key minerals for the energy transition, such as copper and lithium, is the starting point for the multiplication of mining projects.
According to the International Energy Agency (IEA), revenues from critical minerals in Latin America reached US$100 billion in 2022 and will rise to US$150 billion in 2030. By 2050, they could surpass revenues from fossil fuels. To capitalize on this, it is necessary to break down another classic barrier: the slowness of regulatory frameworks to adapt to new needs.
There is an additional challenge: the commitment of the value chain, including logistics, to maintain efficiency, compliance and sustainability from end to end.
DHL Group, for example, is committed to achieving zero emissions by 2050. A transition aimed at benefiting the planet must be carried out by a set of actors capable of ensuring the health of the people involved in these projects, environmental safety and risk mitigation.
The path to decarbonization and the energy transition is not without obstacles, but the volume of opportunities for the development of Latin America is so significant that it is worth— paradoxically—putting all our energy into reaching the destination.
DHL Global Forwarding is an exhibitor at Breakbulk Americas 2024.
