By Margarita Cabrera, Climate Finance Program Manager, Center for Clean Air Policy (CCAP); Adriana Bazán Fuster, Climate Finance Sr. Associate, Center for Clean Air Policy (CCAP)
June 22, 2021
Latin America and the Caribbean is the region with the greatest economic contraction in the world as a result of the COVID-19 pandemic. According to the Economic Commission for Latin America and the Caribbean (ECLAC), more than 2.7 million companies have closed and more than 44 million people have lost their jobs. Gross Domestic Product (GDP) declined by 7.71GDP3T and investment contracted by 201GDP3T.
However, in the face of adversity comes opportunity: the opportunity to rethink the economic development of our countries.. To reactivate the economy in a more sustainable and inclusive way, and at the same time generating employment and social impact to overcome the COVID-19 crisis, Latin American and Caribbean countries require a solid public policy base; to achieve this, it will be necessary to combine long-term mitigation and adaptation strategies to meet the Nationally Determined Contributions (NDCs) under the Paris Agreement, the Sustainable Development Goals (SDGs), with decarbonization pathways to achieve carbon neutrality.
Decarbonization, which can be understood as the process that countries follow to reduce Greenhouse Gas (GHG) emissions in their main productive sectors, until they reach carbon neutrality, becomes the most intelligent path to the sustainable economic development required to face the economic and social consequences of the COVID-19 pandemic. Today, more than ever, the decarbonization process in Latin American and Caribbean countries is more relevant than ever.
More investment and new jobs
According to the International Finance Corporation (IFC, The report will also provide information on whether the countries of Latin America and the Caribbean prioritize decarbonization and carbon neutral routes, the investment opportunity in the region would be as much as USD 1.3 trillion., emissions, with multiplier effects in the creation of more than 27 million direct jobs, and the reduction of 351.5 tons of CO2e, between 2020 and 2030.
The project Deep Decarbonization Pathways in Latin America (DDLatin America and the Caribbean) identifies the electricity, transportation, agriculture, forestry and other land use sectors as central to reducing greenhouse gases and achieving carbon neutrality. These sectors present relevant advantages for the region, such as economic growth, improved air quality, and lower-cost, higher-quality transportation.
Long-term public policies for decarbonization allow decision-makers to set more ambitious sustainable development goals and NDCs, with economic recovery and deep decarbonization outcomes between now and 2050. This helps governments anticipate costs, manage offsets, ensure a just transition to carbon neutrality, and prioritize investment opportunities. that contribute to a real transformation of the priority sectors for reducing greenhouse gases and become more resilient to climate risks.
A private sector committed to decarbonization
No doubt about it, the private sector represents an unbeatable ally in the decarbonization of the countries in our region.. To the extent that governments establish long-term strategies and incentivize the conditions for greater participation of low-carbon technologies, the private sector can become more actively involved in financing the actual transformation of the priority sectors to be decarbonized.
This is what the NewClimate Institute mentions in its report Annual Investment Report 2021 - Sectoral policies to increase resilience and low carbon emissions., emphasizes that investors in the region are eager to receive information and direction on the directions that governments will take over the next 20 to 30 years regarding decarbonization pathways.. Before making any decision, investors consider multiple factors, some of which are: country risk -whether political, economic, institutional or climate risk-; sector risk; and technological risk. Similarly, investors seek to ensure that their investments are based on facilitating conditions and a business environment that guarantees positive returns; therefore, long-term policies become even more relevant not only in the sense of public policy, but also as an enabler of investments and the strengthening of Latin American and Caribbean markets towards sustainability.
The involvement and interest of other private sector players is manifested in their growing participation in coalitions and initiatives to move rapidly towards decarbonization and carbon neutrality by 2050.. A clear example of this is the creation of the global campaign Race to Zero, initiative led by UNFCCC Champions for Climate Action that seeks to bring together the leadership and support of businesses, cities, regions and investors for a healthy, resilient and carbon-free recovery that prevents future threats, creates decent jobs and unlocks inclusive and sustainable growth. The campaign mobilizes more than 2,360 companies, 624 universities, 708 cities, 24 regions and 163 investors that, together with the 120 countries adhered to the Climate Ambition Alliance, represent 25% of the global emissions of CO2 and more than 50% of GDP; such a coalition shows the benefits that private sector actors have in common by generating possibilities for building resilience, increasing competitiveness, driving innovation, promoting the circular economy, and thereby gaining reputation and credibility with consumers, investors and civil society.
The path to carbon neutrality implies - for both the public and private sectors - to play an active role in the development and implementation of the following a unique and active role in the establishment of sectoral and national roadmaps; The objective of the meeting was to: define standards and metrics for quantifying greenhouse gas reductions; discuss solutions and investment opportunities; and lay the groundwork for investment opportunities, based on long-term strategies to achieve decarbonization in a more resilient, emission-free recovery economy that generates inclusive, sustainable growth and greater employment generation in Latin America.
These issues will be addressed by the DecarBOOST project, in the webinar The future of Latin America's decarbonization investments towards 2050, in which we will analyze the importance for the region of financing the development of a low-carbon, green, climate-resilient economy in Latin America. The appointment is next Thursday, July 15, from 9:00 to 10:30 a.m. (Bogotá, Lima, Quito)., in a space for dialogue that will include the participation of:
- Graham Watkins, Inter-American Development Bank.
- Jack Balsdon, of Principles for Responsible Investment, presenting Race to Zero.
- Marcela Jaramillo of 2050 Pathways Platform.
- Marta Torres Gunfaus of the Institute for Sustainable Development and International Relations (IDDRI).
Downloadable documents
- Financing for development in the era of the COVID-19 pandemic and beyond.. Economic Commission for Latin America and the Caribbean (ECLAC). (March 11, 2021).
- Getting to net-zero emissions: Lessons from Latin America and the Caribbean. IADB and DDPLatin America and the Caribbean (2019).
- Deep decarbonization pathways in Latin America: Challenges and opportunities. Inter-American Development Bank (IADB). (September 2020).
- Ctrl-Alt-Delete: A Green Reboot for Emerging Markets. International Finance Corporation (IFC). (January 2021).
