Energy Efficiency, Key to Safe, Universal Supply

With 80% of people living in cities, Latin America has become the most urbanized region in the world. In addition to offering important growth opportunities, the expansion of cities has also spurred greater demand for energy, to meet the basic needs of residents and to develop productive activities on a large and small scale.

In fact, there are now around 30 million people with no access to electricity, and some countries are struggling to meet productive demand efficiently.

In that regard, the region should improve energy efficiency, i.e. improve management of actions to optimize the relationship between the amount of energy consumed and the final products obtained. In addition, the region needs increased power generation capacity, using new technologies to expand supply sustainably over time without causing a greater impact on the environment.

According to the Status of Energy Efficiency in Latin America Report prepared by CAF Development Bank of Latin America, companies must move towards an energy model that reduces operational costs, without exacerbating effects on the environment. The report states that the commercial and industrial sector is accountable for 30% of the region’s final energy consumption and, in many cases, is a key driver of economic growth.

Improving energy efficiency is essential for Latin America to make progress in saving energy, both in consumption and economic spending, and to ensure that all citizens have safe and stable access to energy sources.

However, “there are significant challenges that hinder implementation of this proposal in the region, such as the lack of financial institutions with the capacity to manage energy efficiency-related programs, the low availability of guarantee funds to cover the risks of such projects and the weakness of regulatory bodies and frameworks that favor the development of projects in this area,” explained Mauricio Garrón, director of analysis and energy strategy at CAF.

To meet these needs, CAF has devised different initiatives with the aim of promoting the adoption of efficient energy, including the creation of the Regional Energy Efficiency Program. This program seeks to develop energy efficiency projects for the region and provide project financing and technical assistance. The loans will target revamping and repairs of power generation, transmission and distribution systems, as well as those related to energy demand, such as hospitals, shopping malls, hotels and so on.

In addition, CAF will put in place a technical assistance fund to support the initial stages of energy efficiency projects and assist financial institutions in the development of financial instruments in this area. Thus, the Regional Energy Efficiency Program has developed pre-feasibility and feasibility studies in Argentina, Chile, Bolivia, Peru, Uruguay, Panama, Paraguay, Brazil, Venezuela, Colombia and Ecuador, among others, to build a regional project portfolio and promote the development of green businesses.

Other initiatives include promotion of energy efficiency by introducing green seal and carbon footprint standards certification in companies and their products, endorsed by CAF Corporate Directorate of Environment and Climate Change. The proposal would favor public buildings in particular, i.e. hospitals, airports and ports; public service systems and power-intensive industries, which are the Directorate’s areas of interest.