São Paulo Climate investment in Latin America and the Caribbean doubled from 2020 to 2024, with a jump from US$54 billion (R$281 billion) to US$108 billion (R$563 billion). Despite this, the amount allocated to fossil fuels in the region exceeds twice the amount invested in clean energy sources.
The data comes from the organization Climate Policy Initiative (CPI), which analyzed financing for climate actions on the continent for the first time, in a report published last week.
The entity calculates that renewable energy projects in the region will receive US$43 billion (R$224 billion) in 2024. On the other hand, the oil, coal and natural gas sector attracted US$95 billion (R$495 billion) in the same year, according to the International Energy Agency.
“It is necessary to mobilize new resources for the climate transition, but also to redirect financing that is not aligned with it,” says Sean Stout, senior analyst at CPI.
For the organization, continued investment in fossils threatens progress in combating global warming. The burning of oil, gas and coal is the main cause of climate change across the planet.
"We will live with some level of fossil fuel extraction in the coming years. The central question is what to do with the revenues coming from this activity and how to use them to strengthen resilience", says María Sierra, CPI's financial innovation manager for Latin America.
Felipe Martinelli, energy transition leader at Arcadis, a company not involved in the report, states that it will be necessary to invest in energy transmission and storage systems to encourage renewable sources.
"We don't expect climate investments to replace fossil fuel financing from one moment to the next. The transition happens gradually, but we still have a big challenge in converting the available capital into viable projects," he says.
The expansion of climate financing in Brazil pulls numbers from Latin America and the Caribbean. The country records an increase of 162.5% in resources from 2020 to 2024, mainly due to solar panels and sustainable agriculture, while the amount invested in other nations grew by 50% in the period.
Brazil concentrated 58% of investments in the region in 2024, with US$63 billion (R$328 billion).
The other South American countries mobilized US$25 billion (R$130 billion) that year, while Mexico attracted US$8 billion (R$41 billion). Caribbean nations generated US$5 billion (R$26 billion), and Central America, US$7 billion (R$36 billion).
Brazil also leads when analyzing population size. The average climate investment per Brazilian in 2024 was US$297 (R$1,550), almost double the US$164 (R$856) per inhabitant on average across all countries analyzed.
"It makes sense when considering Brazilian policies and the market, but the proportion is very surprising," says Guillermo Martinez, senior analyst at CPI.
The trend is for a slowdown in green investments in the region, as the US$108 billion in 2024 was below the US$110 billion (R$574 billion) recorded in 2023.
The CPI calculates that climate financing will need to grow at least five times by 2030 for Latin America and the Caribbean to meet carbon emissions targets. The minimum annual amount required is US$467 billion (R$2.4 trillion), according to the organization.
The entity lists recommendations to fill this gap, such as strengthening financial systems, attracting more private capital and aligning public finances with carbon targets.
Mitigation projects, which reduce greenhouse gas emissions, received US$85 billion (R$443 billion) in the region in 2024, 78.7% of the total. Half of the resources went to energy systems, while the forestry and agriculture sector received 29%.
Investment in adaptation, an area aimed at preparing cities to face extreme climate events, is just US$13 billion (R$67 billion), or 12%. Initiatives involving both mitigation and adaptation totaled US$10 billion (R$52 billion), around 9%.
In Brazil, 9% of resources go to adaptation — the lowest percentage of financing for the area in the entire region. In the Caribbean and Central America, investment in adaptation reaches 16% and 21%, respectively.
Half of climate financing in 2024 came from public coffers, with US$54.8 billion (R$286 billion). The other half came from private contributions, which totaled US$53.4 billion (R$278 billion).
The picture is not uniform across countries. While 66% of resources in Brazil are private, public financing predominates in the rest of South America, with 62% of the total. In Caribbean nations, 75% of the funding is public, and the percentage reaches 77% in Central America.
The report states that the distribution of capital is compatible with smaller markets and higher risks, which reduce the attraction of private investments.
The analysis also details whether the investment originates in the country itself or in other nations. International contributions prevail in the Caribbean, where 58% of financing comes from abroad. In Brazil and Mexico, domestic resources account for 89% and 64% of the total, respectively.
"Where local markets are more mature, national capital predominates; where markets are smaller and/or perceived risks are greater, international financing is more prominent", says the CPI.
With the exception of Brazil and Mexico, Latin America and the Caribbean still depend on international public financing. In 2024, resources coming from countries outside the region totaled US$25.6 billion (R$132.4 billion), equivalent to 23% of all local climate investment that year.
Loans are the main form of international public financing and can become traps for indebted nations unable to repay them in the future.
Furthermore, wars and government changes affect the flow of foreign capital. From 2023 to 2024, international public funding for the continent fell by 3%, and researchers say there is a chance of a further drop in 2025.
