Latin American GDP Will Plummet if Climate Change Is Not Curbed
Moody's Investor Service analytics report suggests that climate change poses a huge threat to Latin America as the region could suffer a drop of 16% in its Gross Domestic Product (GDP) by the end of the century if new policies are not implemented to curb the climate crisis.
According to the analysis, the threat is severe for Brazil, Mexico, Columbia and Venezuela as these countries have a higher reliance on fossil fuels. Therefore, the need to mitigate the crisis is of utmost priority.
Furthermore, the report analyzed three different scenarios for Latin America's economy, including a scenario in which immediate policy action will be taken to achieve zero emissions by 2050, a scenario where policies are delayed until 2030 but then accelerated and a scenario in which no new policies are implemented to suppress climate change. In all instances, the report signified compelling losses to the GDP of the region in conjunction with repercussions for infrastructure, health and other areas. The scenario in which no new policies are to be implemented would lead to a loss of 20% to the GDP at the end of the century.
Mexico is the second largest greenhouse gas emitter in Latin America. The Climate Action Tracker, a research coalition, reported that Mexico's actions are not aligned with the Paris Agreement's 1.5 degrees Celsius temperature limit as its policies have put the country on the path of rising emissions.
Even though Mexico has implemented green and transitional policies to mitigate the effects of climate change, this has not yielded impressive results. Carla Ortiz, Country Manager Mexico, RER Energy Group, told Mexico Business that despite Mexico’s commitment to add 30GW of renewable energy by 2030 and reduce greenhouse gases (GHG) by 35%, the energy mix trend and current regulatory environment showcases the country’s evident need for a more complete strategic change since Mexico needs an active stage-by-stage plan to decarbonize.
Similarly, wind and solar energy within the country has ceased to grow when compared to other technologies as only 6% of the mix is generated from wind and 4.8% from solar. In today’s picture, 73% of power production still depends on fossil fuels. What is more, governmental measures, vision, and policies are not helping change the situation.
According to Reuters, Mexico’s government will work in close coordination with the US to accelerate the setup of renewable energy in Mexico, including solar, wind, hydroelectric and geothermal power. In October 2022, President López Obrador said “I insist on not setting objectives that correspond to other governments but starting now to increase our goal, our commitment as a country, and try to accelerate the pace.”