The Latin American region, while still abundant in fossil fuels, is also regarded as having significant potential in the renewable energy sector. The global transition to renewable energy presents an opportunity for industrial development in Latin American countries, which hold comparative advantages in this field. Many Latin American countries possess strong cost competitiveness in solar and wind energy. These global needs, coupled with the region's strengths, underline the necessity of fostering green energy. However, it is evaluated that the conditions required to realize these goals are not fully in place, necessitating responses through international cooperation. This study aims to analyze the current status and institutional foundations of the green energy industry in Latin American countries and, based on this analysis, propose directions for the advancement and cooperation of Korean companies.

This report seeks to understand the structure of the green energy industry in Latin America, focusing on solar, wind, and hydrogen energy, and to explore pathways for Korea's cooperation with the region. It especially highlights Chile, with its significant advantages across all renewable energy sectors and high political stability; Brazil, with the largest market in Latin America and strengths across almost all energy sources; Mexico, which ranks next in market size and holds great potential in solar energy; and Colombia, where energy accessibility is a major issue and official development assistance (ODA) could serve as a key cooperation channel.

Chapter 2 provides a macro-level discussion on the energy transition in Latin American countries. By examining shared and persistent characteristics, it identifies factors to consider for the development of the green energy sector and collaboration with Korea. It points out that underlying the region’s longstanding issues of low growth and inequality are problems in the corporate growth ecosystem, particularly institutional issues such as favoritism toward state-owned enterprises. Many Latin American countries find it difficult to meet energy transition demands on their own, requiring external investment. However, outdated institutional factors in Latin America are likely to continue to act as barriers to attracting investments for energy transition and green energy development.

This chapter also delves into the green energy potential of Latin America. According to IRENA (2023), countries like Brazil, Chile, and Mexico have significant cost advantages in the solar and wind sectors. Northern Chile, Peru, and Mexico hold immense potential in solar energy, while the Patagonia region (southern Chile and Argentina), parts of Colombia, and eastern Brazil excel in wind energy. Additionally, Brazil and Argentina are well-suited for bioenergy production using agricultural resources. These diverse renewable energy resources contribute to the region being one of the largest renewable energy producers globally.

The study highlights the role of hydrogen as an energy source for achieving carbon neutrality, with particular attention to green hydrogen (produced using renewable energy), which is attracting the interest of many companies and nations. Latin America, with its abundant solar and wind resources, has the potential to supply electricity for hydrogen production at the lowest global cost and aspires to become a leading exporter of green hydrogen. Emerging international hydrogen industry platforms, including the Global Hydrogen Council, could facilitate Korea’s collaboration with Latin America in this field.

Lastly, the issue of a just and equitable transition is emphasized not merely as a social concern but as a practical challenge that significantly impacts the identification and execution of projects. International organizations like the Inter-American Development Bank (IDB) are focusing on technical cooperation to support a fair transition. While private companies may concentrate on business aspects, governments and public sectors need to take responsibility for related areas, such as community development, and actively consider relevant models.

Chapter 3 explores Korean companies’ perceptions of the renewable energy industry and Latin America’s potential, based on a survey of 100 professionals from diverse energy companies and institutions in Korea. While respondents generally recognize Latin America’s cost advantages, they do not view it as a critical strategic region. This is attributed to not only a lack of information but also challenges such as political instability, licensing issues, and land ownership disputes in the region, underscoring the need for policy responses.

The chapter also examines the technical advantages of Korean companies to identify comparative strengths. In solar energy, midstream and downstream capabilities stand out, while in wind energy, partnerships with European firms are suggested as a key strategy. In the hydrogen sector, Korean firms are recognized for their strengths in hydrogen-powered vehicles, tankers, and ammonia co-firing technologies.

Chapter 4 provides an in-depth analysis of Chile, Brazil, Mexico, and Colombia and proposes strategies for cooperation. Chile is identified as the most favorable country for entry due to its excellence in both solar and wind energy, clear hydrogen-focused policy direction, and proactive stance on foreign investment and collaboration. The report suggests positioning Chile as a hub country, offering an empirical model for other Latin American nations. It emphasizes establishing stable domestic and international demand plans, leveraging Chile’s interest in securing customers, and building long-term relationships through human exchanges and joint research.

For Brazil, while it is the largest economy in South America, significant challenges such as foreign exchange risks and a lack of information and relationships are noted. The report proposes a detour strategy through partnerships with European companies already established in Brazil and suggests targeting unique growth areas like biofuels and internal combustion engine components.

In Mexico, despite its technical potential, the report anticipates that regulatory practices favoring state-owned enterprises will remain entrenched. It recommends focusing on small-scale distributed energy markets and energy demand along the U.S. border. For Colombia, the report highlights the country’s market-friendly policies and status as a priority ODA partner. It advocates for continued ODA projects targeting regions excluded from the power grid and active involvement in Colombia’s hydrogen energy plans.

Chapter 5 synthesizes the findings to propose strategic cooperation directions for the four major countries and draws lessons from the collaboration approaches of other donor nations. A key feature of advanced donor nations’ energy policies is the integration of energy cooperation with other development projects. Many countries are implementing policy-oriented ODA projects to drive the entry of their domestic firms. Energy cooperation requires not only private investment but also government collaboration, necessitating comprehensive partnerships, including policy coordination. Korea’s experience with initiatives like the Knowledge Sharing Program (KSP) and the Energy Industry Promotion Program (EIPP) offers advantages. However, Korea’s relatively short history of collaboration with Latin America suggests the need to focus on partnerships with willing countries in the region or to actively pursue collaborations with European nations or international organizations that have longstanding relationships with Latin America.

Lastly, the report highlights policy recommendations, including the identification of cooperative projects through international organizations like CABEI and IDB, strengthening intergovernmental cooperation through knowledge sharing and joint research, and improving internal feasibility studies for business development in Latin America.