Sustainable Business Opportunities of All Sizes in Latin America

If your business objective in 2024 is to do well while doing good for our planet, there’s one region in particular that’s rich with resources, innovation, determination, and motivation.

“Although Latin America and the Caribbean are only responsible for 8 percent of global emissions, they have a huge potential to invest and seize opportunities to lead the transition to a low-carbon economy,” the World Bank notes.

A snapshot follows of potential opportunities, from supporting enterprising entrepreneurs to helping the region’s nations make the shift to renewable energy. Read on to get inspired and get started.

Turning problems into progress

Throughout our blog series, we’ve highlighted innovative startups across the LATAM region who are transforming financial services, ecommerce, transportation, healthcare, and beyond. Many such entrepreneurs are putting their ingenuity to work toward sustainability.

Brazilian waste collection utility COMLURB and its private-sector partner Statled Brasil are one example. They’re harnessing the power of mangroves, which have the capacity to capture and store large amounts of carbon dioxide, to restore hectares so far, including what used to be Latin America’s largest landfill in Rio de Janeiro.

“If we didn’t say this used to be a landfill, people would think it’s a farm. The only thing missing is cattle,” engineer Elias Gouveia told AP News. “This is an environmental lesson that we must learn from: nature is remarkable. If we don’t pollute nature, it heals itself.”

Buenos Aires-based Kilimo works in the area of water conservation. Its technology, which uses big data and AI to deliver recommendations for more efficient water use, saved 72 billion liters of water in 2022 alone. What’s more, the company connects farmers willing to use the technology with private companies who are willing to compensate them. The goal: generate long-term changes in sustainable irrigation and make Latin America’s watersheds more secure.   

Espacio Media’s Latin America Reports highlighted several other innovative startups and their achievements.

In Chile:

  • Ruuf created the first residential solar marketplace.
  • SimpliRoute is leveraging AI and other technologies to help delivery drivers find the most efficient and CO2-friendly routes.

In Colombia:

  • KiwiBot is tackling the same challenge with zero-emission semi-autonomous delivery robots.
  • Colorchain is using technology to predict demand and minimize production in the fashion industry.

How to get involved: Connect with the many incubators and accelerators in the LATAM region. Partner with and invest in promising companies directly.

Greening the grid in Argentina

The past four years of economic turmoil put much of Argentina’s renewable energy plans on hold. In 2023, things started turning around.

Argentina’s government announced its first public tender for renewable energy in four years at the start of 2023. The scope: 620 megawatts over 15 years with CAMMESA, the company that manages Argentina’s wholesale electricity market. The focus: bringing biomass, photovoltaics (PVs), and wind power into the grid and incorporating small-scale generation of biomass, biogas, landfill biogas, and hydroelectric power.

In the second quarter of 2023, seven new renewable energy projects entered commercial operation: two wind farms in Buenos Aires province, four solar photovoltaic plants in Cordoba and San Juan, and one landfill biogas thermal power plant in Santa Fe.

When power is generated, it must be stored until it can be used, and in early November, Energy Storage News reported plans by the Ministry of the Economy and CAMMESA to invest in this area. “Interested parties are being invited to propose projects encompassing the financing, construction and management of energy storage systems in the wholesale electricity market. The projects could be for optimizing generation dispatch, providing power reserve services or other mechanisms proposed.”

Even investments in fossil fuels, like plans to develop vast shale gas and oil deposits in the Vaca Muerta formation in northern Patagonia, have a renewables angle, Dialogo Chino noted in its coverage. “Increased gas exports would enable more funds for renewable energy projects, the plan reads. However, it doesn’t propose the creation of a specific mechanism through which such income would be channeled directly towards renewables.”

How will Argentina’s new leadership impact these plans? When senior ministers of Milei’s administration met with US officials in December, advancing the clean energy transition was among the topics of discussion, along with spurring private-sector investment.

It’s important to remember that any green energy transition will happen in the context of Argentina’s broader energy landscape. Milei has proposed “shock economic policies” such as lifted import controls, sharp spending cuts, and significant devaluation of the peso, as well as privatization of entities such as national oil firm YPF, Nucleoeléctrica Argentina, and Energía Argentina. “Milei is also seeking to unshackle crude exports and leave local fuel prices at the mercy of market forces,” Yahoo Finance/ reported.

How to get involved: Engage with a local partner who fully understands the opportunities and challenges, knows who to talk to, and has a view into what’s next.

Tapping the full spectrum of renewable energy

From wind and water to emerging technologies like green hydrogen, LATAM projects are making the most of nature’s bounty to power the next generation of growth.

Is this hydroelectric’s moment? Heavy rains over the past year boosted hydro generation in Argentina—a tide that is in turn lifting renewable energy overall. In 2023, clean power made up 59% of electricity generation for the country, up from 45% the year prior. New development projects, like the nearly completed 360 MW La Barrancosa Dam in Santa Cruz, will bring even more hydro power to the grid.

Bright prospects for solar:  Argentina is a land of abundant sunshine, especially in the north. Yet with significant subsidies encouraging fossil fuels and a need for education and adoption, especially in the residential market, solar energy hasn’t taken off as much as it should.

Could your business get in early on a solar boom?  One area of opportunity is the domestic manufacturing of photovoltaic panels, as Argentina’s solar sector currently relies on imports.

Infrastructure is another need and potential market opening. “Argentina has not made significant investments in its electricity transmission network in the last 25 years, and this is now taking a toll on its capacity to build and connect new solar and wind farms,” Dialogo Chino noted, adding that China Electric Power Equipment and Technology had in 2022 agreed to invest $1.1 billion in Buenos Aires’ energy grid for this purpose.

Wind farms: Activity in this area has been particularly strong in Brazil and Colombia. Brazil announced 71 offshore wind license applications in December 2022, and officials in Colombia launched an offshore wind roadmap identifying 50GW of potential along the Caribbean coast.

Green hydrogen: When renewably generated electricity is used to split water molecules into oxygen and hydrogen, “green hydrogen” is the result—and companies worldwide are taking notice.

In March 2023, Acciona, a Spanish infrastructure and renewable energy firm, and German wind turbine manufacturer Nordex announced a partnership to develop green hydrogen projects in Latin America. In August, retail giant Walmart announced the opening of a green hydrogen plant at its Quilicura Distribution Center in Santiago. Through incorporating products like hydrogen energy cells through its transportation and logistics systems, the facility aims to cut 250 tons of toxic waste each year and reduce its CO2 emissions by 17,100 tons.

How to get involved: See where companies are investing now and what’s needed for the future. Investigate opportunities to support projects and fill in the gaps.

Finally, don’t overlook opportunities to make more traditional lines of business more planet-friendly. Here’s one example. In December, IDB Invest of the International Development Bank announced a loan of up to $50 million, structured as a green and sustainability-linked loan, to Allkem and the Sal de Vida lithium plant. The investment includes a number of sustainability targets: participation of women in the workforce, increased renewable energy through measures including a solar PV plant, and emissions reductions.

Getting started

Given such a broad universe of possibilities, it can be challenging to find an area of focus. Here, national sustainability plans can provide initial guidance and direction. Chile, for example, has outlined a strategy for using green hydrogen to reduce GHG emissions. Peru, in turn, has ambitious goals in the areas of deforestation, agricultural innovation, irrigation access, and resilient transportation.

When pursuing green investments and partnerships, do your due diligence.

Eucalyptus pulp producer Suzano offers one cautionary tale. The Brazilian company attracted billions in green investments due to its high ESG ratings. Its environmental, labor, and community relations practices have also attracted 262 possible and probable civil and environmental proceedings and 2,449 probable and possible labor proceedings.

Large-scale agriculture, mining, oil, and gas projects and projects around protected areas and Indigenous communities are particularly vulnerable. Weak regulations and poor oversight can result in pollution, deforestation, and potential human rights violations.

Have project operators consulted with local communities in their plans? What’s the record of regulatory compliance, including violations, investigations, and other actions?

Fortunately, according to global law firm White & Case, “Sustainability reports are the overwhelming norm among issuers from large Latin American countries,” noting that 100 percent of Chilean, Colombian and Peruvian issuers, 93 percent of Argentine issuers, and 82 percent of Brazilian issuers release such reports.

Specialized consultants and advisors can help you explore opportunities that are good for both your business and the planet. For more information, contact us.