Latin America urged to unite on carbon market efforts

Latin American countries must unite efforts in carbon market development and leverage shared experiences, delegates heard at an industry event.

Carbon markets in Latin America have not reached full stages of development and trail behind those in Europe and California, but they are making progress, addressing unique challenges and opportunities in building their carbon market frameworks.

Latin American countries need a unified voice in global carbon market talks, Alejandra Camara, director of Argentinian climate change consulting firm Genesis, said during the Mexico Carbon Forum in Leon, Guanajuato. "We must make ourselves heard, our problems are not the same as those in developed nations," she added.

Renewable energy projects in some countries, such as Argentina, are still heavily dependent on external support or carbon credits to be viable, Camara said. She criticized the UN's Clean Development Mechanism (CDM) for no longer recognizing these projects as additional in certain countries. An additional project is one that would not have occurred without the incentive provided by carbon credit revenues.

Mexico launched a pilot emissions trading system (ETS) in 2020 to cap greenhouse gas emissions (GHG) from major industries, but the project has stalled for almost two years.

Chile implemented a carbon tax in 2017 targeting large emitters in the power and industrial sectors. The country is developing a more comprehensive ETS to meet its climate goals, particularly through Article 6 of the Paris Agreement, which allows for international cooperation in reducing GHG emissions.

Every region faces unique challenges and "even within our own countries, the situation varies," said Cristian Mosella, director of Chilean firm EnergyLab, emphasizing the need for tailored project strategies that reflect local realities.

Meanwhile, Ecuador is focusing on carbon offset projects to reduce deforestation. The country is a relatively new player in the carbon market, Jackson Torres, director of Ecuadorean agency Soft Landing said. Last year, Ecuador hosted its first Carbon Forum, marking a significant step toward engaging the private sector in carbon offset projects, he added.

Frequent changes in direction after elections and turnover among government officials also make consistent policy implementation on carbon markets difficult, Andres Pascuas from Colombian firm Ambiente & Comunicaciones said.

Colombia introduced a carbon tax on fossil-fuel emissions in 2017 and is developing a broader ETS as part of its Nationally Determined Contributions (NDCs) under the Paris Agreement.

By Antonio Gozain