How Latin America Can Tackle Climate Change and Economic Growth

How Latin America Can Tackle Climate Change and Economic Growth
The Centenario deep-water drilling platform stands off the coast of Veracruz, Mexico in the Gulf of Mexico, Nov. 22, 2013 (AP photo by Dario Lopez-Mills).

Global efforts to mitigate the impacts of climate change are ramping up ahead of the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change, known as COP21, to be held in Paris later this year. Although Latin America accounts for only 5 percent of global greenhouse gas emissions, many countries in the region have taken leading roles in global mitigation efforts.

Brazil was host to the initial 1992 Earth Summit that led to the framework convention, and continues to be a major participant in climate change mitigation efforts, most notably in reducing deforestation in the Amazon. In 2012, Mexico enacted a climate change law that calls for a 50 percent reduction in greenhouse gas emissions relative to 2000 levels by 2050. Last March, Mexico became the first country outside the Organization for Economic Cooperation and Development to submit its COP21 commitments, known as the Intended Nationally Determined Contribution, pledging a 22 percent decrease from business-as-usual emissions levels by 2030. More recently, three other Latin American countries—Colombia, the Dominican Republic and Trinidad and Tobago—have also submitted their commitments for the Paris meeting.

But these ambitious plans face two major obstacles in Latin America. First, slowing economic growth has reduced budgets for climate mitigation investment and shifted governments’ attention to economic stimulus. Second, low oil prices are exacerbating the economic pain in some countries and, in others, dampening the appeal for low- and zero-carbon alternatives. Oil exporters such as Venezuela, Mexico and Ecuador have seen foreign exchange earnings and government budgets hit particularly hard, forcing steep budget cuts and prioritization of scare resources toward economic stimulus. At the same time, net oil importers, including Central American and Caribbean countries, may benefit from improved terms of trade, but they also now feel less economic pressure to switch away from oil consumption. Alternatives, such as biofuels and renewable energy resources, now face more difficult competition from cheap oil and natural gas.

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