For centuries the global economy has been fueled by Latin America’s natural resources. Whether it was the silver galleon export business that profited the Spanish Empire or the export of iron and copper to rebuild China, Latin America has played a pivotal role in revolutionizing trade in the natural resource sector.

But a new revolutionary phenomenon is taking over the region in the renewable energy space and it could provide huge potential for domestic and economic growth.

Canning House recently organized a Green Finance Summit to investigate Latin America’s changing energy landscape

Shift Towards Renewable Energy Resources

In the past few years, Latin America has experienced a major shift towards renewable energy resources including solar, wind, geothermal and biofuel. This major exploitation has brought the region on the brink of an energy revolution that could reshape its economy and open doors for exciting business opportunities. Canning House recently organized a Green Finance Summit to explore some of these opportunities and investigate Latin America’s changing energy landscape.

Despite this shift, BP’s Statistical Review shows that Latin America is still heavily reliant on one of its biggest natural resources – oil. An astounding 20 per cent of the oil reserves in the world are found in Latin America, according to the report.

This makes it the world’s second-most oil rich region, explaining its dependence on this natural resource.  In 2013, 46 per cent of Latin America’s total energy supply was made up of oil – which was well over the average of 31 per cent around the globe.

Experts predict that oil-based fuels are likely to maintain their popularity in the auto industry for many years to come despite surge in electric and hybrid cars. While the electric car companies are slowly making an impact in developed economies, they hardly have a presence in Latin America.

Dependence on Oil-Based Fuels

In Brazil, researchers have developed various ethanol alternatives to non-renewable resources but they aren’t widely accessible to the general population which is why oil-based fuels remain the leading choice among motorists.

To top it off, the auto and transportation industry in Latin America is extremely outdated with cast offs and locally produced older models making it impossible for the region to transition towards electric vehicles any time in the near future.

The power sector in Latin America has already started reducing its dependence on oil. A recent report by the Inter-American Bank says that the region is expected to increase its power output by double by 2040.

To meet this goal, it will need an additional 1,500 terawatt hours of electricity, a massive amount that could power the electricity grid of a country as big as the U.K. for almost five years. But the new power plants being built in Latin America to produce the additional power will not be fueled by oil.

Central American countries that traditionally got their oil supply through exports were the first to phase out power plants fueled by natural resources due to an increase in oil prices and volatility over the past decade.

Some regions like the Dominican Republic where the renewable energy trend hasn’t quite caught on, the energy sector is turning towards coal to fuel its power plants. But burning coal has drawn criticism from environmentalists which will make its adoption highly unlikely in other Latin American countries.

Internet giant, Google, also announced its plans to invest $140 million to grow its solar-powered data center in Latin America

Google Expands Solar-Powered Data Center in Chile

Internet giant, Google, also announced its plans to invest $140 million to grow its solar-powered data center in Latin America to fuel the emerging fourth industrial revolution in the region.

This expansion is the second stage of growth for its data center in Quilicura, which was built in 2015. With the new investment, Google is planning to increase the data center’s size to 11.2 hectares, which will create more than a thousand jobs in construction and 120 permanent jobs in the center.

Google has already spent $150 million on building the data center three years ago. But it wasn’t until 2017 that the company announced to run the plant solely on solar power. Google’s Chilean general manager, Edgardo Frias, said that the data center in Chile has really helped in improving Google’s AI and machine learning capabilities.