Context2 With rising pressures and vast potential, LAC must now deliver sustainable growth through energy system transformation. The global energy landscape is shifting amid intensifying geopolitics, rapid technological disruption and escalating climate risks, creating new opportunities and challenges. The year 2024 was the hottest on record,2 amplifying extreme weather and exposing energy system vulnerabilities. Meanwhile, global energy demand rose at its fastest pace in years (2.2%), as factors such as electrification across sectors and digitalization through artificial intelligence (AI) continued to add new pressures on energy systems.3 In line with increasing demand, energy-related carbon dioxide (CO2) emissions hit a record 37.8 billion tonnes,4 but their growth lagged global GDP growth of 3.2% – hinting at some decoupling between economic growth and emissions. Some of the progress can be linked to the expansion of the clean energy sector, with clean energy investment reaching $2.1 trillion in 2024 – doubling since 20205 and supporting over 16 million jobs.6 However, investment growth slowed to 11%, down from 24-29% in previous years,7 raising concerns about sustained momentum. Meanwhile, protectionism, monetary tightening and geopolitics are disrupting trade and investment, with resource nationalism straining critical material supply chains.The 2025 ETI results reflect these challenges and renewed transition momentum: As many as 65% of countries improved their scores, reflecting gains in affordability, clean energy adoption and access. Energy equity rebounded with lower prices and subsidy reforms; sustainability rose with clean energy growth; while security stagnated amid import reliance and low flexibility. Yet only 28% of countries advanced simultaneously in energy security, equity and sustainability, highlighting the difficulty of a balanced transition. At the same time, global transition readiness growth fell below its 10-year average, as progress in regulatory frameworks, the innovation ecosystem and investment capacity slowed. Restoring the readiness momentum will be crucial for ensuring secure, equitable and sustainable energy systems amid growing global uncertainty. Against this backdrop, LAC occupies a strategic but challenging position. The region faces a dual challenge: high climate vulnerability and vast yet clean energy potential, highlighting urgent adaptation needs. In 2024, the mean temperature in the region was 0.9°C above the 1991-2020 average. The region faced more floods, droughts Energy Transition Readiness: Latin America and the Caribbean 8

Latin America&Caribbean Energy Transition 2025