By: Staff Writer
May 23, 2025
The Economic Commission for Latin America and the Caribbean (ECLAC) in a recent project document said that the transition to low carbon economies in the Latin American and Caribbean (LAC) region presents opportunities and challenges.
The report, Unleashing sustainable growth Financing green productive development policies in LAC,” said that while the LAC accounts for 8 percent of the global population and 7.3 percent of the world’s GDP, it faces “severe climate and fiscal challenges despite contributing only 3% of historical global emissions. The region is grappling with an escalating climate crisis, characterized by prolonged droughts, extreme rainfall, and hurricanes that threaten ecosystems and food and water security. These challenges are compounded by ongoing issues such as deforestation, glacier loss, and rising sea levels, which highlight the urgency of a green transition in LAC.”
The report also said: “The global transition to low-carbon economies presents opportunities and challenges for the region, requiring a delicate balance between achieving development goals and meeting ambitious climate targets.
“To achieve it, LAC must address a significant investment gap, estimated at 7–11% of GDP annually by 2050, particularly in key areas such as renewable energy, sustainable infrastructure, and biodiversity conservation.
“High debt levels and limited fiscal space further exacerbate vulnerabilities, especially as global low-carbon policies threaten the region’s trade-dependent economies. Despite these challenges, the region has unique opportunities to drive a green transition by leveraging its rich natural resources, biodiversity, and renewable energy potential.”
It also said: “Financing the green transition requires mobilizing diverse resources from public, private, and international sources. Domestic efforts, such as reallocating fossil fuel subsidies and leveraging public pension funds, must complement international mechanisms like Multilateral Development Bank (MDB) financing and climate funds.
“Innovative tools like green, social, and sustainability-linked bonds have emerged as pivotal instruments to channel investments into priority areas.
“However, addressing systemic barriers such as underdeveloped financial markets, regulatory inefficiencies, and macroeconomic instability is essential for scaling up sustainable financing.”
The transition to a green economy presents an unparalleled opportunity for LAC to redefine its economic future. By addressing investment gaps and systemic barriers through innovative policies and financing mechanisms it can ensure a transformative, inclusive, and resilient transition.
“Green Productive Development Policies are central to this vision, offering a pathway to align economic growth and development with environmental objectives and secure a sustainable future for the region.”