Sustainability Countries in LAC have some of the world’s most sustainable energy systems. Nearly 80% of countries ranked on the ETI in the region score above the global average for energy sustainability. This reflects a solid foundation built on low-carbon power generation, moderate energy use and lower emissions intensity compared to more industrialized economies. Gains in efficiency and clean electricity – particularly from hydropower and renewables – have supported this advantage. Accordingly, the average share of clean energy in consumption has increased by 21.4% since 2016, reaching 14.8% in 2023. Emissions intensity has recently started to deteriorate and while energy intensity scores have improved by 2.7% over the past decade (the region managed to improve energy efficiency from 97.5 kgoe (kilograms of oil equivalent) per thousand dollars of GDP in 1990 to 86.8 kgoe in 2022) – improvements were far behind the 10.4% progress seen in advanced economies.28 Moreover, while clean electricity is expanding, its reach across end- use sectors remains uneven. Fossil fuels continue to dominate energy use in transport and heavy industry, as is also the case globally, and methane mitigation remains an underutilized opportunity (though some countries like Colombia have implemented reduction strategies).29 Equity The region has also made some gains in energy equity over the past decade, with dimension scores climbing by 2.8% since 2016. On average, scores for the share of rural population with electricity access and overall population with access to clean cooking fuels have climbed by 9.4% and 4.6%, respectively, in the 10 years to 2025. This reflects progress in closing access gaps in less developed countries in Central America and the Andes. Yet, 78 million people still don’t have access to clean cooking.30 Meanwhile, electricity and gas price scores remain near or above global averages in many countries – meaning end-user prices are relatively affordable, largely due to domestic production and long-standing subsidy schemes.31 While this cushions households and firms, it strains public finances, distorts price signals and heightens exposure to price shocks, a vulnerability underscored by recent volatility. However, there is promising momentum in fossil fuel subsidy reform – a key lever for long-term affordability, efficiency and clean energy adoption. Since 2016, the region has cut fossil fuel subsidies by nearly 42% as a share of GDP ,32 to less than half the global average (standing at 0.6% to 1.3% of the region’s GDP between 2015 and 2021)33 – signalling growing alignment between social equity and fiscal sustainability. Security Energy security, historically the region’s highest- scoring dimension, has plateaued, rising just 0.2% over the past decade and now falling below the global average. Many of the region’s countries benefit from diversified generation and relatively low energy import dependence, but structural weaknesses threaten reliability and resilience. T&D losses average 13.5%, exceeding the global average of 10.2%, due to ageing infrastructure, geographic challenges and in some cases, non- technical losses. In Brazil, technical losses make up 8.3% of the 10.7% total reported by the Companhia Energética de Minas Gerais (CEMIG) – and are naturally higher given the sheer length of transmission lines across the country’s vast territory.34 These grid inefficiencies are compounded by limited system flexibility. In 2024 alone, the region lost an estimated 53,000 gigawatt- hour (GWh) of renewable power generation due to curtailment, which is equivalent to the annual electricity consumption of over 10 million households.35 Grid congestion, high T&D losses, weak demand- side integration and declining flexibility (down 9.5% over the past decade) undermine the integration of variable renewables. With only 1% of solar, 10% of wind and 30% of hydropower potential harnessed, the lack of new transmission lines remains a key barrier to scaling renewables. In this context, the addition of storage offers a double benefit: reducing energy costs by enabling new renewables capacity and optimizing power grid transport capacity.36 Transition readiness trends Regulatory progress LAC has made notable progress in laying the policy groundwork for the energy transition. Over the past decade, the region has seen a 13.5% improvement in regulation and political commitment scores. Almost half of the region’s countries have adopted net-zero pledges, and countries such as Costa Rica (see case study 4) and Brazil that are policy leaders have put long-term energy and climate strategies in place. However, on average, policy progress has stalled in recent years, especially in areas such as regulation of renewables, energy efficiency and carbon pricing. Persistent gaps in institutional capacity, coordination and delivery risk undermining the credibility of policy commitments related to the energy transition. Energy Transition Readiness: Latin America and the Caribbean 15

Latin America&Caribbean Energy Transition 2025