The energy transition and its global challenges by region

2022 culminated in the midst of a process towards the energy transition and a world economy shaken by the lags of the pandemic, rising inflation, the conflict between Russia and Ukraine, the increase in energy costs and the decline of energy security.

For this reason, a response that mitigates the possible short-term dependence on fossil fuels and the decrease in resources available for the transition is increasingly necessary.

The report, produced by the global management consulting firm, McKinsey & Company, analyzed the global and regional perspective in 3 points: actions applicable on a global scale; actions applicable to the regions and their local needs and nuances; and finally, actions that governments, financial institutions, companies and individuals could take to find the path towards a more orderly transition.

“The transition is an objective that has become a global challenge, however, countries like the Dominican Republic could approach it from the perspective of cooperation from the various economic and social sectors that make up the country. Being, in part, an economy leveraged on its natural resources, it becomes essential to direct efforts towards their conservation”, explained Antonio Novas, partner and manager of McKinsey & Company in the DR.

On the global scene, the drive towards renewable energy is growing without a decline in global emissions. An example of this is reflected in the demand that grew by 14 percent between 2011 and 2021, resulting in an increase of 5 percent, or 1.7 gigatons (Gt) of CO2 emissions in the last decade, while the proportion of energy Primary fuel from fossil fuels was virtually unchanged at 82 percent.

In turn, the conclusion of COP27 in December 2022 has renewed the uncertainty about the path towards the energy transition, revealing that although progress was made in the search for global cooperation through the establishment of financing agreements for losses and damages for the countries especially vulnerable, progress on emissions mitigation remained largely elusive.

Despite the most marked obstacles of the last three years, the Latin American panorama holds important possibilities, for example, the energy matrix in Latin America is relatively greener than in other regions while the energy mix includes 20% hydroelectric energy and countries In this region, like Brazil, they are among the largest producers of biofuels.

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They also have a large wind and solar renewable potential, such is the case of the Atacama desert, in Chile with a photovoltaic (PV) capacity of 1,800 GW, with capacity factors 20% higher than those of the best locations in Africa, the East Medium or Australia. Brazil and Uruguay have complementary wind and solar energy for a more reliable energy supply or green hydrogen production, while Peru, Bolivia and Mexico have significant solar potential and Uruguay, Mexico and Colombia have wind potential.

With above-average penetration of renewables, Latin America is also well positioned to become a large producer and exporter of green hydrogen derivatives (green ammonia and synthetic fuels).

The region has created a wide portfolio of projects of this type, mainly in Brazil and Chile, rapidly expanding to other countries such as Uruguay, Argentina and Colombia.

According to McKinsey, Latin America could be one of the first to reach net zero thanks to the abundance, variety and quality of its renewable energy resources, which would allow it to position itself as a large-scale exporter of energy and sustainable products derived from renewable energy or biomass – green hydrogen, e-fuels, sustainable materials.

As well as carbon credits linked to nature-based solutions – reforestation, conservation, sustainable agriculture.

In the case of the Dominican Republic, according to data from the National Council for Climate Change, the country’s ambition to reduce greenhouse gas emissions was increased to include among its international commitments, reducing short-lived climate polluting gases such as black carbon, methane, ozone, and Hydrofluorocarbons or HFCs.

Through its Nationally Determined Contribution (NDC), the Dominican Republic committed to reduce its greenhouse gas emissions by 2030 by 27% compared to 2010, so when accounting for the climate polluting gases of short life, the volumes that will be reduced will be greater, thus aiming at the objective of expanding management to improve air quality in the country, knowing that there are great challenges that still remain to be faced.

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