Why this is important to Wisconsin businesses: Global analysts rank Latin American markets among the top in the world for investment in renewable energy.
According to the International Renewable Energy Agency (IRENA), many of the top markets for investment in renewable energy are located in Latin America. The U.S. Department of Commerce recently ranked Brazil, Chile and Mexico among the top markets in the world for U.S. firms and exporters of renewable energy and energy efficiency technologies.
In addition, the pandemic has accelerated a focus on sustainability by policy-makers and investors, as the risks of traditional energy supplies become more evident. Chilean institutional investors and the Santiago Stock Exchange, for example, have started considering the principles laid out by the Task Force on Climate-related Financial Disclosures, an initiative started in 2015 by the Financial Stability Board to enhance private-sector reporting on exposure to climate-based financial risks.
The recent IRENA report details how massive investments in the renewable energy sector could unleash significant growth over the course of the next 30 years by returning between $3 and $8 on every dollar invested. Not only would the potential return on investment be good, but the labor market would also benefit, with estimates suggesting the total number of jobs in the sector could quadruple globally. This would mean an additional 3.2 million jobs generated through investments in energy efficiency, storage and electrifying the transportation sector, all linked to establishing a cleaner energy system. To get there, however, policies will need to support and incentivize a clean energy revolution by engaging diverse stakeholders and uniting behind a common vision.
Indeed, medium- and long-term investments for renewable energy projects are likely to become increasingly common this decade. Already, a coalition of Latin American and Caribbean countries has pledged to meet a target of 70% renewable energy use by 2030. The pledge was followed by the United Nations Conference on Climate Change in Madrid last December, where members of the Chilean Renewable Energy Association (ACERA) signed a cooperative agreement with 12 other energy associations from Latin America and Spain.
ACERA, the largest business association for renewable technologies in Chile, plans to coordinate efforts through the Iberoamerican Alliance for Renewable Energy with eight other countries, promoting sustainability and decarbonization efforts in the electricity sector with partners in Argentina, Brazil, Colombia, Ecuador, Mexico, Peru and Uruguay.
The benefits of acting quickly are clear. Cost-competitive and resilient renewable energy systems, such as solar and wind, are becoming feasible much more quickly than was previously forecast, as the effects of the pandemic play out. As global supply chains become disjointed or disrupted, vulnerabilities in strategic sectors of the economy can have profound impacts on national security. Renewable energy, alongside innovative ways of redesigning utilities and integrating big data through smart technologies, can help to lessen potential supply disruptions and systemic threats to infrastructure. Networks exist in the region to bring major players to the table, harnessing knowledge and the power of markets to guide growth through a sustainable energy transition.