South America has compelling reasons to address the climate and environmental crisis. First, the region is highly vulnerable to its impacts due to its economic reliance on natural resources and the susceptibility of its population.
Addressing these vulnerabilities is crucial for the well-being of current and future generations. Second, as the global economy shifts toward more sustainable pathways to address the crises, South America has the potential to benefit economically by leveraging its clean energy matrix and abundant reserves of critical minerals, positioning itself as a key supplier in the global transition toward renewable energy and electric mobility. However, challenges such as poverty, inequality, and political and economic instability often divert attention and resources away from environmental priorities, constraining the region’s ability to fully embrace and implement comprehensive environmental policies.
Integrating decarbonization efforts with economic diversification objectives could help address environmental and developmental challenges simultaneously, building the necessary internal support for difficult policies. This approach is essential to avoid a new “green resource curse,” which, in South America, would mean remaining limited to being providers of natural resources, but now for a decarbonizing global economy. This scenario could perpetuate historical and persistent social, environmental, and economic challenges.
A major obstacle to green industrialization in the region is “structural path dependency”—a phenomenon that typically affects regions heavily reliant on a few low-complexity economic sectors, limiting their capacity to diversify into more complex products.
To address this challenge, significant socioeconomic and political efforts are needed. Restricted resources, limited institutional capacities, and heavy dependence on powerful stakeholders, typically linked to carbon-intensive and environmentally damaging activities, hinder effective environmental governance, often leading to a “race to the bottom” where regulatory leniency is granted to attract large extractive investments.
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