Energy and climate are not high priorities for the main US presidential candidates in regards to Latin America, but the future of climate finance for the region still depends on the outcome of the election.
Candidates vice president Kamala Harris and former president Donald Trump have opposite views on international climate finance. If Harris is elected, she is expected to continue with President Joe Biden's efforts to increase financing for climate mitigation and adaptation in developing economies. If Trump wins the elections, he will most likely pull the US out of the Paris climate agreement and push back on many similar programs.
Boosting climate finance for the development of clean energy technologies is paramount in Latin America to meet the global goal of tripling renewable capacity by 2030 and reaching net zero by 2050.
While investments in clean energy technologies in Latin America have outpaced those in fossil fuels, they have not increased significantly in recent years. Investment in clean energy rose by just 4.7pc from 2015 to total $66bn in 2022, data from the International Energy Agency (IEA) show. That is far from the annual average of $150-243bn from 2026-2030 and $209-332bn from 2031-2035 the IEA estimates the region needs to align with sustainable development and climate goals.
"Climate finance is a huge issue in Latin America," said Luisa Palacios, managing director and deputy research director at the Center on Global Energy Policy at Columbia University. "In Latin America and emerging economies, you have not seen an increase in climate finance, it is stagnant while it is increasing in the US, in Europe, in China."
The US has ramped up its climate finance contributions during the Biden administration, from which Latin America has benefited. US climate finance exceeded $9.5bn in 2023, from $5.8bn in 2022and is expected to reach $11bn in 2024, under its US International Climate Finance Plan. Funding for adaptation to climate change increased to $2.3bn in 2022 and is expected to reach $3bn in 2024. Total commitments by the US International Development Finance Corporation (DFC) reached almost $14bn during the first two years of the Biden's administration, compared with $12bn during Trump's 2017-2021 administration. The current administration also pledged $3bn to the UN's Green Climate Fund (GCF) last year, while multilateral development banks added $10bn in 2022, to take the total contribution toward climate finance to $60bn.
China's role
How the US-Latin America relationship will be shaped under the next president's administration will also depend on how US-China trade tensions evolve.
"There is going to be much more scrutiny over Latin America and China investment and trade in the energy transition space, regardless of whether this is a Harris or a Trump administration," Palacios said. "The Harris administration would probably represent less of the ‘you are with me or against me' approach than the Trump administration."
Chinese influence in the region is significant, particularly in the energy sector. The Biden administration has stepped up investments in clean energies and critical minerals and has become more competitive with China in the region, a change that has benefited Latin America so far.
Lithium-rich Chile has received investments from Chinese companies in recent years, while the US has also been seeking to enhance commercial ties around critical minerals under the Chile-US free trade agreement. The US has increased efforts toward bilateral agreements on energy transition, climate and critical minerals with other countries, including Argentina and Brazil.
A Harris administration would likely strengthen such agreements, but it is not clear whether a Trump administration would continue with these efforts.
| Clean enegry investments in Latin America | $bn | |
| Year | Historical | Annual average required |
| 2015 | 63 | |
| 2022 | 66 | |
| 2026-2030 | 150-243 | |
| 2031-2035 | 209-332 | |
| — IEA | ||
