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Latin America and the Caribbean can mitigate climate change by tapping into its energy efficiency potential

April 20, 2023 por Ariel Yepez - José Antonio Urteaga Leave a Comment


In Latin America and the Caribbean, greenhouse gas (GHG) emissions from energy reached their highest levels in 2013. However, from 2014 to 2019, regional emissions decreased at an annual rate of 1.74%, to the growing share of renewables in the electricity generation mix, which rose from 53% in 2013 to 59% in 2019, as reported by the Inter-American Development Bank’s Energy HUB.

To accelerate the green energy transition in the region and mitigate GHG emissions, countries also need to pursue energy efficiency more vigorously. The International Energy Agency reported that energy efficiency actions implemented worldwide caused energy consumption to increase 12% less than expected from 2000 to 2017.

Latin America and the Caribbean consumed 1,378 GWh of energy in 2021, an amount that by some estimates could double by 2040. This forecasted growth can be reduced by using energy more efficiently, an achievable goal given the region’s potential for energy savings, as well as the profitability of energy-saving measures using existing technologies.

The region’s energy intensity, which means the amount of energy consumed per unit of gross domestic product, decreased at an average annual rate of 0.8% from 2010 to 2018. Worldwide, energy intensity decreased at a rate of 2.1% per year, making Latin America and the Caribbean the region with the least improvement in this indicator.

According to Inter-American Development Bank estimates, the region has the potential to save at least 20% of its energy consumption just by using more efficient lighting, refrigeration and air conditioning equipment, and motors and compressors. These steps would mitigate approximately 470 MtCO2e, based on an estimated emission factor for the region of 0.34 TCO2/MWh.

To drive this transformation, the Inter-American Development Bank advances energy efficiency in the region and helps countries develop policies, programs, laws, regulations, and standards that enable the markets for the equipment, services, and financing that underpin energy efficiency actions. It also helps create tools that make it easier to prepare and carry out energy efficiency projects. Examples include the Observatory of Energy Management Systems for Latin America and the Caribbean, the Energy Efficiency Information Platform in Buildings (PIE3), and an application for inventorying energy-intensive equipment in buildings.

The Inter-American Development Bank also finances energy efficiency projects in several countries to enhance home and air conditioning equipment or public lighting systems. Through sustainable energy investment programs, it funds energy efficiency measures for administrative buildings, hospitals, schools, or other public buildings, or projects to swap out combustion engines for electric motors. Likewise, we recently supported the Colombian government in the implementation of its energy transition plan in the Colombian Caribbean through a US$34.5 million loan to improve the use of electricity in low-income households and in the official sector of the region. This includes the development of efficient energy management measures that allow reducing the subsidies granted by the national government and the energy consumed.

The bank will continue to push for efficient use of energy in the region to mitigate climate change and achieve other benefits, such as:

  • Green energy transition.
  • Improved energy security.
  • Stronger public finances in countries that subsidize electricity tariffs and fuel prices. On average, countries in Latin America and the Caribbean spend 1% of their GDP on electricity subsidies.
  • More affordable electricity-based services. In Latin America and the Caribbean, 12% of the population has no way to refrigerate food, 30% does not have a washing machine, 44% has no access to knowledge and communication devices, and 64% does not have air conditioning.
  • Improved family finances.
  • More productive and competitive industrial, commercial, and service sectors, including public sector infrastructure.

Energy efficiency is particularly important in Latin America and the Caribbean because of the region’s existing energy savings potential and because of how it mitigates global climate change. Countries, industries, and individual energy consumers also stand to profit greatly from the multiple benefits of energy-efficient actions. And most of all, enabling energy efficiency measures will remain key to mitigating climate change in the region.


Filed Under: Energy Access, Energy Efficiency, English, Español Tagged With: energia, Energy efficiency

Ariel Yepez

Ariel Yépez es Asesor Economista Principal en la Vicepresidencia de Sectores y Conocimiento en el Banco Interamericano de Desarrollo (BID). Previamente se desempeñó como Gerente del Sector de Infraestructura y Energía y como jefe de División de Energía en el BID. Antes de su incorporación al BID, se desempeñó como economista senior de Energía en el Banco Mundial y como Director de Planeación Económica en Petróleos Mexicanos (PEMEX). Asimismo, ocupó distintos puestos en la Secretaría de Hacienda en México, incluido el de Director General de Políticas de Ingresos, Derechos, Precios y Tarifas. Ariel también ha impartido cátedra en la Universidad Nacional Autónoma de México y en el Instituto Tecnológico Autónomo de México. También ha publicado artículos y libros en temas de infraestructura y energía, regulación, finanzas públicas y organización industrial. Su más reciente libro ¿Cómo consumen energía los hogares? Evidencia en América Latina y el Caribe, ha sido publicado en inglés, español y portugués. Tiene un doctorado en economía por la Universidad de Chicago y una maestría en Economía por el Colegio de México. Ariel también recibió el Premio Nacional de Economía del Banco Nacional de México.

José Antonio Urteaga

Has more than 35 years of experience in the field of energy efficiency and climate change. He is currently an Energy Senior Specialist in the Inter-American Development Bank (IDB), responsible for IDB operations with the Mexican energy sector and supporting energy efficiency operations in other countries in Latin America and the Caribbean. Previously he collaborated as Deputy Director of Programs in FIDE (Mexican Private Trust Fund for Electric Energy Savings). Before this activity, he served in MGM Innova as Director of Operations for Mexico and Central America, and as Deputy Director General for Climate Change Projects in the Secretariat of Environment and Natural Resources of Mexico (SEMARNAT). Jose Antonio holds a bachelor’s degree in Economics from the National Autonomous University of Mexico (UNAM), with a specialization in Econometrics. He also studied “Hydrocarbons Economics and Management” at the National Polytechnic Institute and “Economics and Energy Planning” (Bariloche Foundation, Argentina).

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