ECLAC’s issue on renewable energy: How SIDs have been coping

Resuello Aristhea Anne Mendoza | Buenos Aires Herald

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As ECLAC debates continue and are getting more heated in reaching a general consensus, the issue on renewable energy use in the region still remains unsolved, and at large. 

Many factors contribute to Latin America being unable to sustain renewable energy across the whole region, which has significantly affected their sustainable goals. Challenges such as not being able to expand on a transmission infrastructure network and lack of appropriate funding sources have hindered Latin American seats from expanding into a future heavily reliant on renewable energy sources.

Throughout the ECLAC debates, however, many countries focused on the lack of both external and internal funding with the Latin American region, particularly states which are smaller and less economically stable. Small Island Developing States (SIDs) across Latin America rely 

heavily on external funding from bigger, more economically stable states due to a multitude of reasons, but particularly to issues like their small economies being unable to sustain expensive infrastructure for renewable energy, and having high upfront costs and investment risks. Both issues were brought up multiple times throughout the recent ECLAC debates, and have hindered the council’s ability to address the problem of renewable energy completely. 

Smaller economies 

Due to SIDs being relatively smaller in size, it makes it even more difficult to sustain the development of projects which focus on benefiting when implemented in larger, more stable economies. As the economies in SIDs are much smaller and not as stable, challenges arise in accessing such vital resources pertaining to renewable energy. 

Throughout the recent ECLAC debates, various SIDs, such as Haiti, the Bahamas, and Suriname, have highlighted the importance of international funding in sustaining major projects in these countries, while also urging for bigger-economy countries, like the US, Brazil, and Canada, to provide funding and support towards these SIDs to set up initiatives and projects that would help renewable energy be sustained domestically. 

SIDs also highlighted during the ECLAC debate that initiatives should focus more on public-private partnerships, and place a heavy importance 

on the economic benefits public-private partnerships bring to the SIDs in ECLAC, given their economies are already small. 

High investment risks 

SIDs often face major financing risks, such as insufficient financial and technical capacity of local banks and access to international funding, as mentioned previously. Such a risk poses a great strain on the sustainability of major renewable energy projects in SIDs, leading many investors to pull out, or even completely avoid investing renewable energy in SIDs. As such, SIDs often face delays or proceed at significantly higher costs as compared to projects developed in other markets, and therefore are unable to sustain renewable energy projects within their countries, hindering ECLAC's goals towards a climate-friendly environment dependent on renewable energy. 

Although Argentina has a relatively stable economy under President Milei’s reforms, yet still suffering from economic challenges like poverty and high unemployment, there is little evidence to show that Argentina has taken steps towards investing in SIDs grading renewable energy. However, Argentina has actively sought as well as received investment and financial support from international institutions, such as the World Bank and the French Development Agency (AFD), and foreign companies to develop its own substantial wind and solar panels.

In essence, Argentina acts more as a recipient of investment and support for its own domestic renewable energy transition rather than an investor in other nations’, even SIDs’, renewable energy development.

Bibliography

Coviello, Manlio, Juan Gollán, and Miguel Pérez, 2012, “Public-private partnerships in renewable energy in Latin America and the Caribbean, “Documentos de Proyectos 4016, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).” https://ideas.repec.org/p/ecr/col022/4016.

IDB Invest, September 6, 2024, “IDB Invest Renews Argentina’s Sustainable Financing Protocol for Five More Years” 

https://www.idbinvest.org/en/news-media/idb-invest-renews-argentinas-sustainable-financing-protocol-five-more-years.

The World Bank, May, 2024, “Empowering Small Island Developing States: Scaling p Renewable Energy for Resilient Economic Growth” 

https://documents1.worldbank.org/curated/en/099053024112519960/pdf/P1742021b2e53701219afa120372987f453.pdf.

Payton, Ben, June 19, 2024, “How Small Island ‘Renewables Laboratories’ are Leading the Way in Transitioning from Fossil Fuels’, Reuters, 

https://www.reuters.com/sustainability/decarbonizing-industries/how-small-island-renewables-laboratories-are-leading-way-transitioning-fossil-2024-06-19/.

The United Nations, “Building Sustainable Energy Access in the Most Vulnerable Countries” https://www.un.org/ohrlls/news/building-sustainable-energy-access-most-vulnerable-countries.

Greene-Dewasmes, Ginelle, December 19, 2023, “Lessons from Small Islands” Why Equitable Partnerships are Key to Funding the Energy Transition”, World Economic Forum, https://www.weforum.org/stories/2023/12/small-islands-equitable-partnerships-funding-energy-transition-wef24/.