Latin America and the Caribbean: the green transition can be a factor of economic and social change

Spread the love

Thirteen of the 50 countries most affected by climate change are in Latin America and the Caribbean, says a report by the OECD, ECLAC, CAF and the European Commission

Latin America and the Caribbean: the transition ;n green can be a factor of economic and social change

A green transition can generate environmental, social and economic benefits. PHOTO: Fernando Calzada

climate change could significantly worsen long-term economic prospects and exacerbate inequalities inLatin America and the Caribbean. For this reason, it is urgent to move towards an ambitious and comprehensive green agenda to address its consequences and improve the well-being of all. A green transitioneffective in the region could potentially generate 10.5% more new jobs by 2030.

That concludes the report “Latin American Economic Outlook (LEO) 2022: Towards a green transition and fair”, presented today by OECD, ECLAC, CAF and the European Commission in the development of the COP27 in Sharm El-Sheik (Egypt), where it was presented this Monday President Gustavo Petro.

According to the fifteenth edition of the report, the economic slowdown this year, an unstable international context hit by the aggressive war of Russia against Ukraine, the increase in inflationary pressures and The reduction of the macroeconomic policy space hinders the ability of the economies of Latin America and the Caribbean to return to the path towards sustainable growth and the protection of the most vulnerable. For example, it is estimated that in 2022 vulnerable householdsin the region faced an average price increase of 3.6 percentage points more than the nationally representative household.

“Environmental impacts compound these difficulties. Thirteen of the 50 countries most affected by climate change are in Latin America and the Caribbean. LEO 2022 argues that promoting a green transition through active mitigation and adaptation policies implemented in a systemic manner can make societies in the region more resilient to climate change and promote better development,” the report states.

This breaks down the environmental, social and economic benefits that a green transition can generate. For example, investing in renewable technologies can not only substantially reduce greenhouse gas (GHG) emissions), but can also provide lower-cost power generation and reduce dependence on imported fossil fuel products.

“The region is well positioned to embark on an effective green transition and accelerate progress towards its economic, social and environmental development goals. The share of Latin America and the Caribbean in global GHG emissions is proportional to the share in the total world population (8.4%), slightly higher than the share in the total gross domestic product (GDP) (6.4%). ), but lower than the per capita emissions of other regions with similar levels of development. Its energy matrix is ​​also greener: renewable energies represent 33% of the total energy supply compared to 13% globally”, the report states.

In this context , LEO 2022 provides a detailed description of the solid and comprehensive political actions necessary to promote a green and just transition in Latin America and the Caribbean. Five priority areas are highlighted.

The first is to further transform the region's energy matrixby shifting it away from fossil fuels and by moving towards decarbonization and electrification in all sectors, especially heavy industries and transportation, while taking steps to increase energy efficiency.

“In the hardest-to-decarbonize sectors, such as chemicals, steel, road freight, aviation and shipping, investments in low-carbon alternative fuels, including green hydrogen and sustainable biofuels, will be key”, it is emphasized.

Another is to design fiscal policies that are sustainable and compatible with the green and just transition, gradually eliminating harmful subsidiesfor the environment and harnessing the potential of environment-related taxes. Expand the development of innovative financial instruments, such as debt-for-nature swaps, and mobilize development financial institutions and the private sector.

“It is adopting regulatory tools that include standards and taxonomies for green or sustainability-linked bonds is crucial,” he adds.

In addition, promote industrial and productive development policies to transform the economic structures of Latin America and the Caribbean and create more and better jobs, by adopting the principles of the circular economy and the blue economy. .

“This will require investing in new technology and skills, and training workers to take advantage of the opportunities the transition opens up. It will also require expanding active labor market policies and designing better targeted social protection systems to support negatively affected workers during the green transition,” he adds.

On the other hand, strengthening the institutional mechanisms to foster consensus on the policy options necessary to advance the green transition. The green agenda can be the cornerstone of a new sustainable social contract: 68% of citizensof the region see climate change as a very serious threat to their country in the next 20 years, a level higher than that of other regions.

“The objectives of the nationally determined contributions must translated into concrete, visible actions, implemented and financed in the context of long-term strategies, such as national development plans”, he points out.

Finally, develop and expand the international associations. At this point, he highlights that with half of the biodiversity in the world, the countries of Latin America and the Caribbean are key players in international climate negotiations.

“To take full advantage of new international green standards and regulations, and manage the impact of policies adopted in partner countries in the region, for example in trade, the countries of Latin America and the Caribbean should improve the cooper ation with key actors, including the private sector and multilateral institutions”, he concludes.