Latin America and Caribbean could save US$36 billion through energy efficiency investments by 2018


Sao Paulo, Brazil — (METERING.COM) — September 17, 2008 – Latin American and Caribbean countries could save an estimated US$36 billion over the next decade by adopting affordable and available technologies to improve their energy efficiency, including compact fluorescent lighting and efficient motors, according to a new report from the Inter-American Development Bank.

The report, “How to save US$36 billion worth of electricity (without turning off the lights),” estimates that a 10 percent reduction in energy consumption in Latin America and the Caribbean as a whole could be achieved at a cost of approximately US$16 billion and the saving would amount to some 143,000 GWh in 2018.

Alternatively if the region does not improve its energy efficiency, it would need to spend around US$53 billion to build the equivalent of 328 gas-powered open cycle generators (250 MW each) to produce the same 143,000 GWh of power.

The report estimates the productivity of energy use and compares prices for residential electricity, gasoline and diesel fuel in 24 of the region’s countries.

“The good news, for Latin America, is that the region has rich energy efficiency ‘reserves,’ and it has barely begun to exploit them,” says the report. “Though some countries – notably Mexico and Brazil – are already reaping substantial savings from energy efficiency programs begun in the 1980s and 1990s, most of their neighbors have yet to look seriously at conservation.

“The opportunities are everywhere, because Latin America’s energy productivity is uniformly low. The region is still overwhelmingly reliant on incandescent light bulbs, for example … The region’s factories and water systems use millions of old, energy wasting electric motors and pumps. In many countries the transportation infrastructure is grossly inefficient. Commercial and residential buildings are full of outdated air conditioning systems, refrigerators, washing machines and water heaters.”

The report says that whether Latin America will begin to exploit this potential will largely depend on whether governments provide the right incentives, which can take many forms, from tax rebates and subsidies to regulations requiring specific efficiency standards for vehicles and appliances.

Currently Latin American governments are spending billions of dollars to subsidize fuel prices. While these subsidies have the laudable goal of protecting consumers from high fuel prices and keeping inflation in check, they also tend to discourage investments in efficiency. “What if even part of that US$50 billion were spent on incentives for consumers or companies that purchase energy efficient lighting or machinery?”