A Look at Latin America’s Evolving Energy Market

The energy sector in Latin America has evolved from the use of traditional resources to a greater use of conventional, modern resources

Latin America has undergone a number of watershed changes in the last several decades.  How has the energy sector evolved broadly? What variety of opportunities and constraints exist for the region?

The energy sector in Latin America has evolved from the use of traditional resources to a greater use of conventional, modern resources. Cleaner hydrocarbon natural gas has become a mainstay in the energy matrix and is a valuable feedstock for the future. Furthermore, the energy sector in Latin America has evolved towards a greater focus on clean energy, including solar, wind, geothermal, hydro and biomass. Opportunities exist such as in Mexico’s energy sector and elections in Brazil, Uruguay, and Panama point to a greater emphasis on pro-investment policies.

Can you discuss the role of the state in Latin American markets? (nationalism v. market control)?

Countries such as Mexico, Colombia, Peru and Chile,which now make up the Pacific Alliance bloc, demonstrate fiscal responsibility and liberalized trade and are magnets for energy investment. Venezuela employs expansionary fiscal policies, macroeconomic imbalances, populist policies, foreign exchange controls, and price controls. Some countries such as Brazil fall somewhat in the middle as it has employed statist policies in the energy sector which have dampened investment.

What challenges continue to face the energy sector?  What sort of practical coordination or integration exists at the regional level? How effective is it?

There are several challenges in Latin America’s energy sector, in particular deficits in infrastructure, human capital, and state interventionism....

Read the full interview on page 13 here.