The Economic Effects of an Accelerated Electrification and Decarbonization Process in Latin America

This research analyzes the potential economic effects of accelerated electrification and decarbonization in selected Latin American countries. Using an economic equilibrium model, four scenarios were evaluated: 1) a Business-as-Usual (BAU) scenario, 2) a BAU scenario with increased electricity interconnections, 3) a green scenario with an emphasis on higher renewable energy growth rates, and 4) a green scenario integrating both higher energy growth rates and interconnection improvements. We aim to assess the impact of these strategies on significant economic indicators by comparing the optimal solutions of each scenario, and determine the difference in gains. Our approach prioritizes the complexities of the energy sector while underscoring economic factors, enabling the identification of necessary compensatory redistributions. The comparison of these scenarios will provide policymakers and stakeholders with valuable insights into the costs and benefits of transitioning to a more sustainable energy system in Latin America.