Latin America and the Caribbean can save US$621 billion annually by decarbonizing energy and transportation by 2050

The Latin American and Caribbean region can save US$621 billion annually if the energy and transport sectors reach emissions neutrality by 2050, according to new data from the United Nations Environment Programme presented today at the UN Climate Change Conference COP25 in Madrid.

The findings are included in the executive summary of the Carbon Zero Latin America and the Caribbean 2019 report, published in advance and which highlights the opportunities, costs and benefits of the joint decarbonization of energy and transport. Both sectors account for two-thirds of regional fossil carbon dioxide emissions and about 25% of greenhouse gas emissions. These emissions are expected to double by mid-century if current policies persist.

Under that scenario, emissions from the energy sector are expected to increase 140% (up to 1.2 billion tons), considering that regional electricity demand will almost triple by 2050. Satisfying the new market under a fossil fuel-based generation matrix would put the region off track to meet the Paris Agreement’s 2°C target, the report warns.

Converting to a fully renewable energy system would be the least expensive way to electrify the region and achieve the climate commitments of the Paris Agreement, the study says. A renewable matrix will require cumulative investments of $800 billion by 2050, less than the $1083 billion that would be needed to meet energy demand in the current generation scenario.

The report shows that by decarbonizing the energy matrix and fully electrifying the transportation system (including maritime and land systems), by 2050 the region could avoid 1.1 billion tons of CO2eq and save $621 billion per year.

These savings include $300 billion in avoided expenses on passenger ground transportation and $222 billion reductions in electricity costs. Thanks to the decrease in air pollution in cities, $30 billion in health spending could be avoided.

The total savings anticipated by the authors take into account the cost of phasing out fossil fuel-based power plants before the end of their useful life. The value of stranded assets was estimated at US$ 80 billion (2018) by mid-century.

The transition to full decarbonisation in these specific sectors will create additional benefits, such as 7.7 million new permanent jobs and 28 million years of work in temporary allocations related to green technologies, infrastructure construction or transport electrification.

“The energy and transport sectors present great opportunities for rapid and far-reaching action, which is both environmentally sound and financially attractive. A coupled transition not only aims to reach zero emissions by 2050, but to contribute to economic growth and improved public health,” said Leo Heileman, director of the United Nations Environment Programme for Latin America and the Caribbean.

“This transition represents an important opportunity to raise the level of ambition of Nationally Determined Contributions (NDCs) and long-term strategies to meet the international climate commitments set out in the Paris Agreement and support the achievement of the Sustainable Development Goals,” said Carlos Manuel Rodríguez, Minister of Environment and Energy of Costa Rica.

Since 2012, non-conventional renewables have doubled their share of the regional matrix, and together with hydropower accounted for nearly 54% in 2018, according to the report.

In addition, the efforts of several countries to create an enabling environment for the energy transition have secured more than US$ 35 billion in investment in non-conventional renewable energies over the last 5 years (44% of global foreign direct investment flows).

Although progress is being made, the authors call for a bolder political agenda to accelerate the changes needed to achieve decarbonization by mid-century.

The report Zero Carbon Latin America and the Caribbean 2019: the opportunity, cost and benefits of the combined decarbonization of the energy and transport sectors in Latin America and the Caribbean, is based on the first Zero Carbon report (2016), which called on the region to focus on the complete decarbonization of four areas responsible for 90% of greenhouse gas emissions: power generation, transportation, land use and industry.

The new edition was prepared with the support of EUROCLIMA +, a program funded by the European Union, and the Spanish Agency for International Development Cooperation (AECID).

Source: UN