Latin America’s top sustainability stories in 2017

Covering a range of issues including renewable energy, climate politics, resilience, cities and natural capital, we present five of the top sustainability stories in Latin America this year.

To kick-off 2017 here are five of the top stories (and some predictions) that are set to dominate the sustainability agenda in Latin America this year.

This year there will be an important shift as issues such as clean public transport establish themselves firmly on the development agenda rather than being labelled primarily as environmental concerns. Countries will also more visibly back carbon trading initiatives which will usher in greater participation from the private sector.

Latin American countries are forging ahead with the ratification of the Paris climate agreement. Out of the 33 countries making up the region, over 20 have now ratified including Chile, Cuba, Argentina, Costa Rica, Brazil, Mexico, and Bolivia. Countries are also working to integrate the Sustainable Development Goals into their national development plans and pass legislation such as promoting electric vehicles in Costa Rica.

A growing number of Latin American actors will be making the case for why tackling climate change is a prerequisite for achieving sustainable development and reducing inequality. The region is highly vulnerable to climate impacts including droughts and floods. Enhancing resilience is essential and could help drive the sustainability agenda while leaders also focus on the opportunities from low-carbon development.

On the way to 2020, several major events will shed light on whether Latin American countries are mainstreaming sustainable development into their national development plans.

First, there will be several elections. Bolivia, Chile, Honduras and Ecuador will choose new presidents in 2017 while Argentina will hold legislative elections and there will be several state elections in Mexico. In 2018, six presidential elections will be held in Brazil, Mexico, Costa Rica, Paraguay, Colombia and Venezuela.

Second, in 2018 the UN will hold a facilitative dialogue to assess countries’ progress towards achieving the Paris Agreement’s goals. Countries will be encouraged to ramp up the level of ambition of their climate plans to be resubmitted in 2020. While some countries including Argentina have been willing to revise their plans, Costa Rica is one of a few nations with a national climate change plan which is in line with the Paris Agreement’s goals.

Third, there will be myriad conferences this year where climate change and sustainable development will strongly feature including the EU–CELAC Summit in El Salvador and the G20 hosted by Germany where Brazil, Mexico and Argentina will participate.

1. The resilience and adaptation agendas will grow in prominence as the region’s confronts growing climate impacts yet scant funding may hinder progress

2016 was the hottest year on record replacing 2015 as the previous title holder. Latin American citizens continue to bear the brunt of extreme climatic events.

Last April, flooding and landslides from heavy rain affected nearly half a million people in Argentina, Ecuador, Bolivia, Brazil, Paraguay, Peru and Uruguay. Since 2014, droughts have ravaged the Caribbean, Central America and Bolivia due low rainfall and exacerbated by El Niño. Today, there are more than 3.5 million people in El Salvador, Guatemala and Honduras facing food insecurity due to failed harvests.

Although scientists’ ability to attribute specific natural disasters to climate change remains a work in progress they are getting better at linking specific events. This progress matters to support policymakers make better informed decisions when attempting to adapt.

Projected impacts, not just from hurricanes, but also from tropical depressions and changing weather patterns, will bear out difficulties for hydropower and for agricultural investment. To build resilience, Latin American governments will attempt to speed up their work to prepare national adaptation plans yet a lack of international funds and domestic resources will hinder progress, ensuring that adaptation remains principally reactive. Meanwhile, there will be growing calls from civil society and the media that governments need to do a better job at protecting citizens from climate change and these natural disasters.

Within adaptation discussions, the emphasis on protecting natural capital could be prominent such as reforesting hilltops to prevent mudslides during heavy rains. There will also likely be growing calls to improve understanding and policy options to enhance the resilience of the region’s energy infrastructure especially hydropower. A 2016 report by the Inter-American Development Bank on the vulnerability of Central American hydropower to climate change offers one example as countries attempt to identify policies to adapt.

Climate-induced migration from vulnerable areas plighted by recent droughts in Central America and Mexico towards the U.S. will also be more conspicuous in the press.

2.Support for renewables will increase as a key way of managing the region’s exposure to growing financial and physical risks from climate change

Renewable energy has made significant strides in Latin America as the cost of technologies fall combined a welcoming regulatory environment. In 2015, the number of countries in the region with renewable energy targets nearly doubled compared to the year before.

Support for renewable energy will continue, not least because it helps improve energy security by reducing the reliance on fossil fuels imports and reduce vulnerability to climate impacts, including droughts, which undermine the region’s hydroelectric capacity.

The last couple of years have seen records levels of clean energy investment in countries like Chile and Uruguay and the growth in renewable energy generation capacity has been highly impressive. In some areas, renewable energy is nearing grid parity, raising the call for energy independence as a domestic political goal. This progress sends a strong signal to investors that renewable energy continues to be the leading option for new power generation capacity.

Argentina, which has declared 2017 as the “year of renewable energy” aims to achieve 8% of its electric generation to derive from renewables by 2018, and 20% of generation to derive from renewables by 2026. Chile aims to reach 70% of its electricity from renewable sources by 2050.

Despite this progress, renewables will continue to be held back by fossil fuel subsidies, transmission line congestion and difficult investment climates. Enthusiasm must be tempered also by the fact that non-conventional renewables including solar, wind and wave power represent roughly 0.9 percent of the total power generation in Latin America meaning there is a considerable way to go to achieving a low-carbon energy system.

The number of private and state-owned natural resources companies including those in the fossil fuel sector supporting renewables will increase. EY estimates that Latin American mining companies will invest more than US$1 billion in renewable energy projects by 2022, up from US$37 million in 2013.

In 2017, there will be more voices framing the benefits of renewables as a key means to generate employment. This will serve to underline the significance of clean energy as an instrumental component of building a sustainable economy.

This year there will be a shift in the geographical origin of clean energy investment in Latin America. Brazil and Europe are the current leaders for clean energy investment in the region, according to ClimateScope’s 2016 report. Although Chinese banks are the largest investors in Latin America’s energy sector, fossil fuels and big hydro dominate. China’s investment in renewables in Latin America is small but this will change in 2017 as it attempts to capitalize on the region’s commitment to renewables and reaction to terrible air pollution, and its own clean energy credentials.

Given the intermittency of wind and solar, the ability to store energy is an essential factor for the progress of renewable energy. The drop in the cost of batteries and improvements in technology are very encouraging. Lithium is a key component of rechargeable batteries with more than half of the world’s reserves found in Chile, Argentina and Bolivia. In 2017, these countries could become important players in the emerging market for lithium-ion batteries and their use in electric vehicles and energy storage. Beyond exports there could be deals between these countries and foreign investors such as China which helps promote electric vehicles and battery storage at the national level.

Two additional factors, which have yet to really feature in the regional debate, will grow in prominence strengthening the case for renewables: stranded assets and the movement to divest from fossil fuels.

Stranded assets are defined as assets that have suffered from unantici­pated or premature write-downs and devaluations. These assets may become stranded due to falling clean technology costs, fossil fuel divestment campaigns and policies to reduce emissions.

A 2016 report says that investors controlling more than US$5 trillion in assets have committed to divesting from some or all fossil fuel stocks on their books. Approximately 688 institutions and 58,399 individuals across 76 countries have committed to divest from fossil fuel companies. This process is increasingly being driven by the recognition that fossil fuel companies are exposed as the world shifts toward clean energy sources. Various financial institutions are keen to reduce the impact of climate change on financial and economic stability by mainstreaming climate risk into investment decision making.

This year we will see the debate on stranded assets and divestment from fossil fuels shoot up the agenda as foreign and domestic investors begin to meaningfully grapple with these risks.

3. Regional climate change politics remain in flux with new alliances and initiatives emerging

Latin America is a fragmented continent with countries participating in various groups at the UN climate change negotiations. Although all countries in the region are committed to finding a multilateral solution there are important differences in what constitutes the best way forward.

These regional groups are shifting. The AILAC group was originally founded by 6 nations in 2012 and has now expanded to 8 members (Chile, Colombia, Peru, Paraguay, Honduras, Costa Rica, Panama and Guatemala). It is possible that AILAC expands further in 2017 with the inclusion of Argentina and Uruguay.

In 2014, the presidents of the Pacific Alliance (Mexico, Chile, Peru and Colombia) which has a big overlap in its membership with AILAC, made a joint declaration calling climate change one of the greatest global challenges. In July 2016, the Pacific Alliance launched a Green Growth Platform inspired by a similar platform in the EU which brings together ministers, CEOs, European lawmakers and experts to discuss the economic opportunities and challenges of building a low carbon and resilient economy.

With the development of carbon markets in both Chile and Mexico underway, the Pacific Alliance’s climate agenda is attracting attention. There could be a joint declaration from the Pacific Alliance on climate change which is supported by the governors of a number of U.S. and Canadian states such as Québec, Ontario, and California, which are interested in linking up the carbon markets of the Western Hemisphere.

Faced with a very tough renegotiation of NAFTA, a deteriorating economy and low approval ratings, the administration of Enrique Peña Nieto’s may choose to continue to promote climate change as key plank of its foreign policy. In addition to reaffirming its support to the Paris Agreement, this move could curry favor with partners in the EU, Canada and China which are also set to defend the global climate regime.

Brazil is a key mover and shaker at the UN climate negotiations. The Temer administration is attempting to rescue the economy and manage the fallout from various corruption investigations yet it will continue to defend the Paris Agreement. Brazil’s soft power was instrumental in contributing to securing the agreement and it may feel compelled to defend it as an example of a functioning rules-based international system underpinned by multilateralism. We may see a joint EU-Brazil declaration in favor of the agreement or by BASIC with Brazil’s partners including China, South Africa and India.

The Chile – Brazil initiative, a diplomatic effort to nudge CELAC to make joint statements in both 2014 and 2015 at the UN climate talks could continue especially if the Trump administration decides to renege on the U.S.’s commitments on climate change.

4. Latin American cities will lead the charge for implementing innovative solutions for low carbon sustainable development

Latin America and the Caribbean’s urban population is expected to reach 567 million by 2025. If the expected growth continues by 2050 roughly 90 percent of the region’s population will be living in cities. Many Latin American cities are highly vulnerable to climate change impacts including sea level rise, flooding, and droughts. These urban spaces will therefore play a fundamental role in managing climate risks and promoting low-carbon and inclusive development.

Latin American cities are pioneers in building greener urban spaces. Curitiba and Bogotá are leaders in creating Bus Rapid Transport Systems and more than 45 cities in the region have invested in similar transport systems. In 2015, mayors from 20 Latin American cities signed the C40 Clean Bus Declaration in Buenos Aires, which aims to improve air quality and reduce emissions by incorporating low- and zero-emission buses in their fleets.

Yet the growth in emissions and air pollution is highly problematic. Air pollution is a major public health issue with a number of cities exceeding thresholds set by the World Health Organization for the concentration of airborne pollutants. Latin America’s transport sector is the fastest growing source of energy-related emissions. Linked to a robust resistance to dismantle fossil fuel subsidies, most countries do not prioritize emission reductions in the transport sector although there has been some progress with the increase in the number of electric vehicles and the introduction of green taxes to promote cleaner vehicles.

Across Latin America citizens are very concerned about air pollution with various polls showing that it is a top environmental priority. To improve air quality and living standards, there will be growing support for bike-sharing schemes and bicycle infrastructure, car-free days and the expansion of electric public transport.

With the raise in private vehicle ownership there will be greater interest in electric vehicles although hefty price tags will remain a barrier. Car companies with major operations in Latin America will increase their efforts to market their electric vehicles in the region. Drawing on the experiences of European countries in promoting electric vehicles there will be greater cooperation between Europe and Latin America to establish incentive packages such as tax reductions for electric vehicles or higher taxes for regular cars.

Air pollution and associated emissions and their links to public health and air quality will become a big political issue for election campaigns and platforms over the next two years.

Citizens groups like Colombia’s La Cuidad Verde and Costa Rica Limpia will grow in prominence and continue to inspire efforts in other cities. These groups are often led by young people who challenge the idea that citizens should accept woeful pollution levels, outrageous traffic jams and substandard public transport. Their calls for policymakers to create more inclusive, open and transparent decision making processes will garner greater support.

5. The critical role natural capital to both reduce emissions and building resilience will leap up the agenda

Latin America is a “biodiversity superpower” with 25 percent of the planet’s arable land, 22 percent of the world’s forest area and 31 percent of the earth’s freshwater resources. The region’s immense endowment of natural resources is both a blessing and a hindrance. Climate change impacts on biodiversity will be severe with the predicted replacement of tropical forest by savannas in eastern Amazonia and central and southern Mexico and Central America.

One of the region’s greatest challenges is the sustainable management of its natural resources. The focus on commodity-led economic growth has put natural resources under huge pressure. This creates more vulnerability to climate-related risks such as water scarcity. This year natural capital, mangrove forests in coastal regions, which acts as a natural line of defense against storm surges, will feature more prominently in the resilience debates.

Despite massive reductions in deforestation in the Brazilian Amazon since 2004, recent figures are concerning. Deforestation in Brazil from 2015-2016 reached the highest level since 2008 due to a variety of factors including weaker environmental protection.

Brazil’s National Congress is attempting to advance an agenda which would severely weaken existing legislation protecting the environment and indigenous people, while undermining Brazil’s climate goals. Brazilian civil society groups will stage a robust defense this year.

With emissions from deforestation representing roughly 20% of global emissions, the inclusion of REDD+ in the Paris Agreement demonstrates the importance of forests. An ongoing challenge for Latin America is how the protection of forests through REDD+ and similar initiatives will be financed. Private sector involvement is set to become increasingly significant.

The restoration of ecosystems will be a major focus this year. The Brazilian government announced last December their aim to restore and promote sustainable agriculture across 22 million hectares of degraded land. Colombia also announced plans to close the forest frontier as a key component of a post-conflict future with efforts including implementing strong tenure reform, and placing large areas of forest under indigenous peoples’ control.

In 2017 there will be growing calls for indigenous peoples to be more meaningful involved in managing forests. Relatively modest investments are needed to secure land rights for indigenous communities in the Amazon which could significantly help reduce emissions from deforestation while generating major economic benefits. The World Resources Institute suggests that in Bolivia the total estimated benefits of securing indigenous lands will be more than US$50 billion in returns over two decades, when factoring in global benefits from emissions reductions and safeguarding ecosystem services like clean water and biodiversity.

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*This article expresses the opinions of the author alone.

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