Climate change threatens Latin American economy
Climate warming and extreme weather events have brought and will continue to bring severe challenges to the Latin American economy. Agriculture, tourism, coastal urban development, fresh water supply and transportation bear the brunt.
Agriculture is a vital economic sector in Latin American countries, accounting for 5% ~ 18% of the region's GDP, 20% of the employed population and 1 / 4 of the total foreign trade exports. If the contribution of agricultural comprehensive enterprises in the whole food supply chain is taken into account, the economic value created by the agricultural sector can reach 25% ~ 30% of GDP in Brazil, Argentina and other countries. At the same time, agriculture is the most vulnerable economic sector in climate change. Changes in temperature, precipitation, light, greenhouse gas concentration and other factors will have an impact on a region's agricultural production layout, planting system, crop yield and even trade comparative advantage. 2020 is one of the three hottest years on record in Central America and the Caribbean and the second hottest year in South America. Heat waves frequently hit Latin America, and drought and abnormal precipitation affected crop yields. According to the Research Report of the United Nations Intergovernmental Panel on climate change (IPCC) and the World Meteorological Organization (WMO), Latin America will become one of the regions hardest hit by global climate change. The world bank has estimated that climate change will endanger up to 70% of Brazilian soybeans and 45% of Mexican corn. By 2030, the yield of beans and corn crops in Central America and the Caribbean may be reduced by about 20%, and the fish catch in the Caribbean will be reduced by up to 50%.
Tourism is the economic lifeline of many Caribbean countries, but frequent extreme weather, rising sea temperature and rising sea level will bring bad luck to the development of tourism in these countries. According to the prediction of meteorological experts, under the scenario of global warming of 2 ℃, the number of strong hurricanes in the Caribbean will increase by 40% in the future, twice the current average, and the tourism industry in the Caribbean will be under great pressure. In addition, according to the assessment of the United Nations panel on climate change, even if the sea level rise in the 21st century is controlled within 1 meter, 60% of the tourism infrastructure in the Caribbean Sea area will be damaged, and airports and ports will be submerged by the rising sea water.
Low lying Caribbean countries are most vulnerable to climate change. According to the statistics of the United Nations Economic Commission for Latin America and the Caribbean, at present, more than 27% of the population in Latin America live in coastal areas, of which 6% ~ 8% live in high-risk or extremely high-risk areas vulnerable to coastal meteorological disasters. According to the research of the world bank, by 2050, coastal floods caused by sea-level rise may cause an average annual loss of US $940 million to US $1.2 billion in the 22 largest coastal cities in Latin America.
Glaciers are an important source of fresh water for water, power generation, agricultural production and ecosystem protection in Latin America. Since 2010, with the increase of seasonal and annual temperatures and the significant decrease of annual precipitation in Latin America, the loss of Andean glaciers is accelerating. World Bank research shows that if the global warming trend continues, many tropical glaciers in the Andes will disappear within 20 years, which will not only threaten the agricultural irrigation and water supply of about 77 million people in the region, but also reduce the amount of hydropower. Countries that mainly rely on hydropower, such as Bolivia, Peru and Ecuador, will be seriously affected.
The impact of climate change on transportation is not only reflected in the rise of sea level, which may inundate airports and ports, but also the normal operation of roads, railways, navigation and aviation caused by floods, landslides, mudslides and avalanches caused by extreme weather. In Panama, for example, drought and unstable rainfall have affected its main economic driver and source of income, the Panama Canal. In 2020, due to drought and water shortage, the Panama Canal had to reduce the daily booking of ships and impose a "fresh water" fee on ships. As Latin American countries rely heavily on waterway transportation for trade, the threat of climate change to transportation will become more prominent.
Green recovery has become a new highlight of post epidemic policies in Latin America
Since 2020, many Latin American countries have taken adaptation to climate change and inclusive growth as the core of economic adjustment plans, and green recovery has become a new highlight of post epidemic policies of major Latin American economies.
At the 26th United Nations Climate Change Conference, Brazil announced that it would increase the greenhouse gas emission reduction target in 2030 from 43% to 50%, and promised to advance the target of zero illegal deforestation from 2030 to 2028. The Brazilian Ministry of economy and the Ministry of environment jointly launched the "green growth plan", which plans to use public and private investment with a total scale of about 411 billion reais (about US $81.2 billion) to promote the green and low-carbon transformation of the Brazilian economy. Forest protection, low-carbon agriculture, renewable energy, urban transportation, logistics, green infrastructure, ecotourism, public health, waste management and communication technology are the main areas of concern of the plan.
Colombia has updated its "nationally owned contribution (NDC)" target and is ambitiously committed to reducing greenhouse gas emissions by 51 per cent by 2030 (compared with a previous target of 30 per cent). In order to promote energy transformation, the government has proposed a total of 27 renewable energy and transmission projects, including 9 wind energy, 5 solar energy, 3 geothermal energy and 1 hydrogen energy projects and 9 transmission lines. The total planned investment is more than 16 trillion pesos (about US $4.54 billion). It also plans to increase the consumption of electric vehicles and natural gas vehicles, and achieve the goal of reducing the demand for liquid fuels, diesel and gasoline by 20% by 2050.
Chile has also updated its NDC target and advanced the carbon peak time from 2030 to 2025. At present, Chile is committed to eliminating coal and oil production capacity and reducing its dependence on imported fossil fuels. Chile has always been a leader in renewable energy policies in Latin America and a global investment destination for solar and wind energy. In 2020, Chile's hydropower has been close to 45% of the total power generation. At present, Chile's main policy goal is to ensure that 70% of electricity comes from renewable energy by 2030. In addition to hydropower, the remaining 25% of renewable energy will be achieved mainly through wind and solar energy.
Uruguay proposes to achieve carbon neutrality by 2030. This target is earlier than 2050 proposed by most developed economies (such as EU, UK, Canada, Japan, New Zealand, etc.), which shows Uruguay's ambition in addressing climate change and sustainable development. At present, the green transformation of Uruguay's economy is mainly concentrated in three areas: first, smart agriculture, which increases food production and reduces carbon emissions through sustainable production methods; Second, clean energy production will continue to tap the development potential of hydropower, wind energy, solar energy and biomass energy. Transportation (especially urban buses and small vehicles) will become the key to the transformation of electric energy layout; Third, promote the long-term sustainable development of ecotourism and tourism.
Costa Rica seeks to become a zero carbon country through the development of clean energy technologies. The country's clean energy power generation has exceeded 98% for seven consecutive years. In 2019, with its efforts in protecting the natural environment and addressing climate change, Costa Rica was awarded the highest environmental protection honor "earth Guardian Award" by the United Nations. At present, the country is continuing to implement the decarbonization plan. The goal is to achieve 100% renewable energy power supply by 2030, 70% electrification of buses and taxis by 2035 and 100% electrification by 2050.
The Argentine government also announced the establishment of a free trade zone in R í o Negro province in December 2021 to promote the development of a green and low-carbon economy. Fortescue company of Australia announced that it plans to invest US $8.4 billion to build a green hydrogen plant in the free trade zone. It is estimated that the annual green hydrogen production capacity will reach 2.2 million tons by 2030, and will generate 15500 direct jobs and 40000 indirect jobs.
China Latin America green trade has great prospects
The urgency of dealing with climate change in Latin America, the difficulty of economic recovery after the epidemic and the determination of major countries to carry out low-carbon transformation have created new opportunities for China Latin America green economic and trade cooperation. Renewable energy development, climate smart agriculture, flexible city construction and green product trade are key areas worthy of attention.
Renewable energy development
Latin America is rich in solar energy, wind energy, hydro energy, geothermal energy and biomass energy resources, but insufficient funds and backward technology restrict the development of renewable energy. The epidemic has brought a heavy burden on the finances of Latin American countries. The funds available for green development in the post epidemic economic stimulus plan are stretched, accounting for only 14.5%, lower than the global average of 19%. Although Brazil, Colombia and other countries have ambitious green development commitments, the ultimate goal is still a question mark.
China has a strong capital base and has formed a relatively complete technical industry system. Low wind speed wind power technology ranks among the top in the world. The hydropower field has the world's largest independent design and manufacturing capacity of one million kilowatt water turbine units. Photovoltaic power generation technology has been rapidly iterated and refreshed the world record of battery conversion efficiency for many times. The green recovery plans of Brazil, Colombia, Chile, Costa Rica and other countries provide important opportunities for Chinese enterprises to enter Latin America. With the rise of green hydrogen boom, there are bright prospects for further exploration of China Latin America green hydrogen cooperation on the basis of renewable energy cooperation.
Climate Intelligent Agriculture
Climate smart agriculture, advocated by the food and Agriculture Organization of the United Nations, will be the main direction of agricultural low-carbon transformation in Latin America. China Latin America cooperation in climate smart agriculture can be divided into the following three directions.
First, the intelligent management of agricultural production. For example, China's advanced technologies such as Internet of things, big data and cloud platform are applied to Latin American field management on a large scale, so as to realize the early warning of meteorological disasters and the intelligent monitoring of temperature and humidity, soil environment, water resources, diseases and pests and even the storage, transportation and processing of agricultural products.
Second, agricultural science and technology cooperation guided by improving total factor productivity. For example, combine China's agricultural technology with Latin American biological resources to jointly develop new crop varieties with high temperature resistance, strong light and ability, outstanding comprehensive resistance and wide adaptability.
Third, the construction and application of new energy agricultural infrastructure. Such as using solar energy technology to develop indoor vegetable cultivation, and building a three-dimensional new photovoltaic fishery with photovoltaic power generation in the upper layer and aquaculture in the lower layer.
Flexible city construction
Climate change poses a severe test to the ecosystem of Latin American coastal cities. At present, Antigua and Barbuda, Dominica, Jamaica, Suriname and Trinidad and Tobago in the Caribbean are strengthening the construction of resilient cities with the support of the United Nations Environment Programme to improve the response capacity to climate disasters. Latin American countries have potential demand for green infrastructure construction such as water supply and drainage, flood control and waterlogging prevention, low-carbon buildings and coastal defense projects. At present, the infrastructure cooperation between China and Latin America is mainly concentrated in the fields of transportation, power, communication and so on. With the gradual emergence of urban vulnerability in Latin America under climate change, there are important cooperation opportunities in the construction of flexible cities between China and Latin America. In the future, more Latin American cities may incorporate the medium and long-term impact of climate change into their infrastructure planning, design and approval. For Chinese enterprises, paying full attention to the green and flexible demands in Latin American urban construction in investment is undoubtedly an important magic weapon to improve the success rate.
Green product trade
China is one of the world's largest producers and exporters of green products. At present, among China's exports to Latin American countries, green products account for only 6.3%, and about half of the trade volume flows to Brazil and Mexico. With the launch of green recovery plans in many Latin American countries, China's green technologies and green products are expected to obtain export opportunities in more Latin American countries. Under the severe challenge of climate change, Latin America maintains strong demand for low-carbon products that help reduce pollution and greenhouse gas emissions. Chinese enterprises should actively explore the green market in Latin America, increase the export of green trade products that meet the needs of low-carbon transformation of Latin American economy, such as renewable energy equipment and new energy vehicles, build a China Latin America green value chain through low-carbon technical cooperation, and jointly promote the quality improvement and upgrading of bilateral trade.
(author: Research Institute of the Ministry of Commerce)
Source: import and export manager
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