This region consists of South Asian countries: India, Pakistan, Afghanistan, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives. India and Pakistan together account for 80% of the region’s energy use.

^{*All GDP figures in the report are based on 2017 purchasing power parity and in 2023 international USD} 

Current Situation

• Renewable energy sources have high penetration in power, accounting for more than 60% of generation, more than the global average. Fossil fuels account for about two-thirds of primary energy supply, below the global average. 
• Oil in Latin America has the highest oil share in primary energy supply (40%) among ETO regions. In transport demand, it meets 91% of energy needs. The region accounts for about 10% of global oil supply. 
• Mineral wealth is vast (Monteiro, 2025) with 60% of world lithium reserves (top producers: Bolivia, Argentina, Chile) and 40% of copper (top producers: Chile and Peru). Brazil holds the world’s third-largest reserves of nickel and rare-earth elements.
• Climate risks include floods, storms, and drought driving water scarcity impacting industries like mining and hydropower. Infrastructure disruptions cost more than 1% of GDP on average across the region, and up to 2% annually in 60% of Central American countries (World Bank, 2022).  

  Pointers to the future  

• Hydrocarbon producers balance net-zero goals with resource exploitation, one example being Brazil hosting COP30 for climate action while continuing oil and gas block tenders in 2024 and 2025, many in the Amazon. Yet it also advances offshore wind (Government of Brazil, 2025) and CCS frameworks, with Petrobras launching its first CCS pilot tender. Colombia also enters offshore wind, preparing its first auction in 2025.
• Import-dependent countries, such as Mexico – reliant on imported US gas to meet 80% of demand and over half its electricity – will gain fuel-cost savings from reaching the government’s 45% renewable electricity target by 2030 (22% in 2024) and is opening up to independent power producers (Goldwyn et al., 2025). Mexico also eyes opportunity in LNG export terminals on its Pacific coast, intended for Asian markets with US shale gas.
• Renewable electricity is expanding steadily in the region, such as the RELAC countries targeting 80% of generation by 2030 (Paredes et al., 2025). Chile surpassed 40% solar and wind generation in 2024, with related energy storage now standard. Brazil’s storage framework is imminent, and it is planning its first BESS auction in 2025. Storage adoption grows due to grid constraints, curtailment, and stability needs across the region.
• Promising hydrogen leaders in the region are Brazil, Chile, and Colombia, building on renewable electricity bases. Production ramp-up will involve international finance, such as the European Investment Bank in the Team Europe Renewable Hydrogen Funding Platform for Chile, though developments are still at early stages.
• Demand sectors, such as in buildings and transport, have hitherto uneven and evolving policies aimed at decarbonization and insufficiently reduce dependence on petroleum products. 

ETO Forecast

Renewables and oil shape our forecast for Latin America

The global energy transition is a mosaic of regional and national pathways, each shaped by distinct resource access, economic structures, and policy priorities. Within this global context, Latin America presents a particularly complex and instructive case. The region is navigating a dual-track energy transition, characterized by the coexistence of two parallel and powerful systems: a resilient, mature hydrocarbon sector and a rapidly expanding clean energy ecosystem. This duality is not a temporary phase but a structural feature of its energy landscape for the coming decades.

For Latin America, the forecast needs to go beyond a simple narrative of old versus new energy. The future of energy in the region will not be defined by the rapid success of one system over the other, but by the complex, and at times contradictory, interplay between them.

Our assessment considers the region's unique economic and demographic trajectory, which sets it apart from both mature, low-growth economies and other high-growth emerging markets. Our analysis dives into four key features:

1. The continuing role of the regional hydrocarbon sector, analysing the specific drivers of supply-side resilience in key producer nations and the structural obstacles to a rapid decline in oil demand.
2. The expansion of the clean energy sector, focusing on Latin America’s established leadership in renewable power generation and the challenges and opportunities in emerging decarbonization pathways.
3. The challenge of meeting substantial growth in total energy demand, a factor that fundamentally shapes the pace and nature of the transition and reinforces the dual-track reality.
4. The policy and investment landscape, with a complex interplay of international finance, national strategies, and socio-economic hurdles that will ultimately govern the transition's speed.

Oil’s lasting presence

Latin America’s hydrocarbon sector will demonstrate significant resilience through 2040. Regional oil and gas production is forecast to remain stable in the medium term before entering a gradual decline, in contrast to steeper declines in other regions. This persistence is anchored by two key factors. On the supply side are globally competitive oil production in Brazil and new unconventional gas developments in Argentina. On the demand side is structurally persistent oil consumption in the transport and industrial sectors where low-carbon alternatives are not yet scalable. Our forecast shows oil's share of the primary energy mix reducing from over 40% today to approximately 20% by 2060, a significant drop but one that leaves oil as a dominant energy source.

This supply-side resilience is a function of diverging national realities. The primary driver is Brazil, whose prolific pre-salt offshore fields are a globally significant source of non-OPEC production growth. These assets are economically robust, ensuring continued investment. In parallel, Argentina is rapidly expanding its unconventional natural gas production from the Vaca Muerta shale formation. This development is not only boosting domestic supply but has also prompted plans for LNG export terminals, positioning Argentina as a potential new global gas supplier. These growth stories contrast with the outlook in Mexico, which is managing mature, declining fields, and Venezuela, where production remains constrained. This varied landscape results in a relatively stable regional production forecast for the medium term. Natural gas consumption is forecast to grow in the medium term before declining post-2040, reinforcing the longevity of broader hydrocarbon infrastructure.

On the demand side, oil consumption is linked to sectors where displacement is a multi-decade challenge. The transport sector is the dominant consumer, and its transition is slowed by the slow turnover rate of the vast existing vehicle stock. Other factors include the high upfront cost of electric vehicles (EVs) for a majority of consumers, persistent fossil-fuel subsidies in key economies, and gaps in charging infrastructure. As a result, the region's EV adoption is forecast to lag leading markets like Europe and China. The strong biofuels industry, particularly in Brazil, also supports the longevity of the internal combustion engine fleet by providing a lower-carbon liquid fuel alternative.

Beyond road transport, demand in hard-to-electrify sectors like aviation and maritime shipping remains strong, with low-carbon alternatives not expected to reach scale before 2035. Non-energy is the only long-term growth sector for oil. In this sector, oil demand will grow 70% by 2060, reflecting a higher demand for asphalt and bitumen for infrastructure, and an increasing production of plastics and other petrochemicals.

World’s cleanest power generation

Latin America will solidify its position as a global leader in decarbonized electricity, with renewables set to generate nearly all (99%) of the region's power by 2060. This profound decarbonization of the grid, led by solar and wind, is a central and successful pillar of its transition. 

The region's power sector is already a global benchmark, with renewables accounting for 63% of generation today, the highest of any region. The next phase will be even more dramatic. While hydropower will remain a crucial source of dispatchable energy, its share of the mix will decrease as solar and wind become the primary engines of growth. However, this transition is not without challenges. Increasing climate-driven drought poses a risk to hydropower reliability, highlighting the advantages of a more diversified renewable portfolio.
The forecast points to a system dominated by solar and wind, which together will account for over 70% of all electricity generated by 2050.

Utility-scale solar PV is set for the most significant growth in the short- and medium-term. This is driven by the exceptional solar resources in locations like Chile's Atacama Desert and falling technology costs. A critical element of this forecast is the rise of solar+storage configurations. These systems, which pair PV panels with co-located batteries, directly address the intermittency of solar power, extending its availability into the evening hours and providing greater grid stability. This hybrid model is forecast to be a key enabler of solar's expansion in Latin America.

Off-grid and behind-the-meter (BTM) solar PV will also develop significantly, representing 20% of all electricity production in the region by 2060. This segment will consistently represent around a half of the region’s solar capacity additions throughout our forecast period, the second highest share in the world behind grid-deprived Sub-Saharan Africa. 

The region will leverage both its established onshore and nascent offshore wind resources. Onshore wind is already a mature industry, with strong and consistent wind patterns in areas like Patagonia and northeast Brazil supporting large-scale development. We forecast onshore wind to really take off from the 2040s and be the largest source of power generation by 2060. The forecast also anticipates a moderate emergence of offshore wind, particularly after 2030. Countries like Colombia, which held its first offshore wind auction in 2024, and Brazil, which is developing a regulatory framework, are poised to become early movers in this sector.  

The clear competitive advantage of renewables will leave very little room for nuclear power generation. Beyond those currently operating in Brazil and Argentina, we forecast no new large-scale installations. The uptake of small modular reactors will be limited to a few gigawatts, and not before the end of the 2040s, when costs have gone  down due to development in other regions.

Renewable integration requires resilient power grids. The lack of adequate transmission infrastructure is already leading to bottlenecks in some areas, with prices reaching zero at certain nodes of the respective electricity markets, limiting the profitability of renewable projects. This will be addressed, and our forecast foresees doubling of power line capacity in the region.

The integration of such high shares of variable renewables will rely on a massive expansion of energy storage. Battery storage will be a key tool to alleviate this congestion. Our forecast projects that utility-scale battery storage capacity will surge from a negligible 5 GWh in 2024 to 1,500 GWh by 2060. This rapid build-out is essential not just for storing excess energy but also for managing grid frequency, preventing the curtailment of renewable generation during sunny or windy periods, and ensuring a stable and reliable power supply.  

Green hydrogen, an unmet potential

While Latin America's abundant renewable resources position it to be a highly competitive green hydrogen producer, its growth prospects face considerable challenges from global competition and a lack of developed policy frameworks.

Potential for cost leadership

The region will achieve ones of the world's lowest levelized costs for electrolysis-based hydrogen. Costs will already be below 3 USD/kg in the 2030s and close to the sought-after 2 USD/kg, making the region’s hydrogen competitive with natural gas-based production. This cost-effectiveness, originating from high-capacity solar and promising wind resources, gives Latin America a significant production advantage. In key locations, like in Chile and Brazil, production costs have the potential to fall below 2 USD/kg earlier. This potential is attracting significant interest for large-scale project development aimed at the export market.  

Global competition and market access

Despite this cost advantage, the region's path to becoming a major global supplier is constrained. Forecasts suggest Latin America will be an early mover, supplying a large share of global seaborne hydrogen trade in the 2030s, mostly to Europe. But exports will not ramp up significantly, and the region will represent less than 20% of seaborne trade in the 2050s. This is primarily due to intense competition from regions like North America or Middle East and North Africa, which already have advanced policy incentives and established infrastructure roadmaps.

Ammonia as an energy carrier is not forecast to be a major export market. Our forecast indicates that Latin America will even need to import around a half of its demand by 2060. Some production will be exported to North America, but exports to Europe and Asia are expected to be limited due to higher transportation costs and established supply chains from competing producers.

To capitalize on its potential, the region would have to establish supportive regulatory and financial frameworks. Without robust government action to de-risk investments and streamline project approvals, Latin America is forecast to become a marginal player despite its inherent resource advantages.  

The challenge of meeting growing energy demand

A projected 20% growth in final energy demand in the next 20 years is the fundamental context shaping Latin America's transition. This growth is a key differentiator from mature economies and means the region's expanding renewable power must work to meet new demand first. This dynamic slows the absolute displacement of incumbent fossil fuels and reinforces the dual track that defines our forecast. Only when final energy demand plateaus in the 2040s can electricity and other decarbonized alternatives really start replacing oil in the fuel mix.

Unlike mature economies with flat or declining energy use, Latin America is a growth region. Its population is forecast to expand from 670 million to 750 million by 2060, and a 75% increase in GDP per capita will fuel significant increases in energy consumption.

Buildings will be the largest growth sector. Energy demand will increase by almost 70% by 2060, a 1.5% compound annual growth rate. Such an increase reflects the increased cooling demand and data centres installation, driven by a combined effect of rising living standards and growing population. This will be powered predominantly by electricity, of which 20% will be self-generated by BTM solar panels from the 2040s.

Demand for manufacturing will grow more moderately to 2060 (30%) due to a production increase in manufactured goods and base materials, driven by both a growth in population and GDP per capita. Both electricity and hydrogen shares of the mix will be slightly below the global average, highlighting the challenges to tap in the region’s potential.

This is usually referred as the 'decoupling challenge’: the need to grow the economy without growing emissions. This structural reality is a primary reason why the absolute consumption of fossil fuels is projected to decline more slowly than in low-growth regions, and why energy-related emissions do not decline before the 2040s.

Policy summary

A non-exhaustive list of sector policy initiatives, emphasizing the 2024 to 2025 period

References

Goldwyn, D., Ochoa, C. (2025). ‘Mexico’s new electricity law could boost the country’s energy sector. But big questions remain’. Atlantic Council. March 11. 

Government of Brazil (2025). President Lula signs law creating renewable energy generation from offshore wind turbines. January 10. 

Monteiro, Thomas (2025). ‘Latin America: The new battleground for critical minerals’. Global Finance. March 5. 

Paredes, J., Levy, A., González, Urquizo, M. (2025). Best practices in solar and wind energy forecasting in Latin America: Lessons learned and results from a pilot project. 

World Bank, (2022). A roadmap for climate action in Latin America and the Caribbean 2021-2025.