The energy transition is rapidly transforming the global economy, at a pace comparable to past industrial revolutions. However, for Latin America and the Caribbean, the main challenge is not limited to supplying critical minerals or clean energy to the rest of the world; it is essential to define what role the region will play in the new global value chains: whether as a supplier of raw materials or as a strategic player in the new industrial economy.
This is the central conclusion of the new working paper titled “Global Value Chains in the Energy Transition amid a New Geopolitics,” developed jointly by the Latin American and Caribbean Energy Organization (OLACDE) and the Georgetown Americas Institute (GAI). The analysis argues that the energy transition involves far more than a decarbonization process; it represents a structural transformation of economic, technological, and geopolitical power worldwide.
The study argues that technologies such as solar, wind, batteries, electric mobility, smart grids, and clean hydrogen are redefining global production chains. In this context, knowledge, innovation, and advanced manufacturing are capturing a growing share of the economic value generated.
Strategic resources, uncertain development
Latin America and the Caribbean is well positioned within this new energy geopolitics. The region holds significant reserves of lithium, copper, and other critical minerals, in addition to having one of the world’s greatest potentials for renewable energy. However, the report warns that this comparative advantage does not automatically guarantee progress toward higher-value economic development.
The document points to a historical paradox: countries rich in natural resources often fail to capture the greatest economic benefits because they tend to concentrate on the early stages of the production process. Meanwhile, the most profitable activities tend to be found in areas such as research, innovation, and advanced manufacturing.
Geopolitics is reshaping supply chains
According to the analysis presented, international competition is no longer based solely on low costs. Factors such as economic security, supply chain resilience, strategic autonomy, and diversification are now crucial elements shaping global decisions on investment and production.
Trends such as nearshoring and friend-shoring seek to reconfigure production processes based more on geopolitical and institutional considerations than on economic factors alone.
For OLACDE, this environment presents a significant opportunity for Latin America and the Caribbean, provided the region manages to develop the industrial and technological capabilities needed to move into higher value-added sectors.
A public agenda to capture value
Given this challenging outlook, the document proposes a comprehensive strategy to boost regional competitiveness through sustainable public policies. Its priorities include:
- Developing national strategies for effective integration into global chains.
- Unifying industrial, trade, and energy policies.
- Investing adequately in logistics, energy, and digital infrastructure.
- Strengthening specialized human capital together with STEM education.
- Fostering systems geared toward applied innovation.
- Promoting regional integration to increase production scale.
- Establishing stable regulatory frameworks that attract investment.
- Moving beyond extraction alone toward the processing and industrialization of critical minerals.
The report concludes that the energy transition represents an unprecedented economic opportunity for Latin America and the Caribbean in decades; however, it also poses one of the most complex strategic challenges for the region’s current development model. According to the working paper, it is essential to transform, today, the region’s existing natural advantages into strong industrial capabilities that support a new sustainable model.
The decisions made now will determine whether Latin America and the Caribbean become key players in the global energy economy or continue to be limited to their traditional role as suppliers of raw materials alone.
View the full document at the following link: https://www.olacde.org/publicaciones/cadenas_valor_esp/
