16 February 2024

Jacob Lubbers Estrada

Towards a green EU? Not without Latin America

The European Union (EU) needs to strengthen its ties with Latin America and the Caribbean (LAC) to concretize the energy transition.

The Spanish presidency to the EU – characterized by its strong focus on the EU’s international position and the strengthening of EU-LAC relations – took important steps to this end. This term, with crucial initiatives such as the EU-CELAC Summit and the visit of President Von der Leyen to Argentina, Brazil, Chile, and Mexico, marks an important chapter in EU-LAC affairs. However, greater diligence and commitment are required to take this partnership to a strategic level, in order to ensure that the EU remains on track to achieve its climate and green energy ambitions.

Besides the EU, other parts of the world intend to build more climate-resilient economies, with a broader scope on the use of green energies. In light of these developments, the LAC region’s geopolitical relevance will augment, as it holds the necessary resources to enable the global energy transition.

Energy transition

Fear of climate change has contributed to a heavier emphasis on sustainable practices. This move towards sustainability requires global and European actors to reduce carbon emissions, mindful of the fact that the latter are bound by international treaties and EU sustainability legislation stemming from the European Green Deal.

For the successful implementation of such objectives, electrification and energy storage infrastructure are of vital importance. However, the EU cannot install such infrastructure entirely on its own. It depends on critical raw materials such as lithium, for batteries, and silver and copper for energy storage. The LAC region provides these critical resources. Argentina, Bolivia, and Chile constitute the so called “lithium-triangle”, which possesses over 60% of the globe’s lithium stocks. Mexico, Peru, and Chile hold 43% of the world’s silver reserves and 40% of those of copper. Hence, if countries – or regional blocks – aim to materialize a successful energy transition, they will need to engage in strategic partnerships with LAC.

The geopolitics of the energy transition

Other relevant players on the international arena, such as China and the United States, are well-aware of the central position that LAC has in shaping the energy landscape of the future. Hence, China has started exploiting lithium in the lithium-triangle and has invested billions of dollars to facilitate access to other minerals such as silver, copper, and tin throughout the region. China’s mobilization in the LAC region spurred the United States into action. In early November, President Joe Biden announced an investment platform through the Inter-American Development Bank to provide LAC countries with an alternative to “debt-trap diplomacy”, alluding to China. Shortly after this announcement, Biden officials visited Chile, Uruguay, and Paraguay to discuss the supply of minerals and energy.

Considering LAC was traditionally defined as the “backyard” of the United States, it is eye-opening to see Washington’s worries amid the advance of China’s access over the region’s critical resources. The Biden administration’s worries are a geopolitical takeaway for the EU’s green energy ambitions: if the United States, with its already profound political and economic relations with LAC, considers it must deepen its ties with the region, the EU will need to accelerate even more to access the critical resources LAC provides.

Given the role LAC plays to enable the EU’s energy ambitions, and the recent steps taken by China and the United States to gain access to LAC’s critical minerals, the EU should enhance its efforts to deepen ties with its Latin American counterparts. The ongoing work on trade agreements with Mexico, the Mercosur block, and the recent agreement with lithium-abundant Chile – crucial to the EU’s aspiration of becoming a global leader in battery production – is pivotal. However, there’s always more to be done.

Contextual and historical viability

Ever after the invasion of Ukraine and the disruptive effects on Europe’s energy and agri-food supply chains, the EU has made efforts to strengthen its “strategic autonomy”, defined by the European Parliament as “the capacity of the EU to act autonomously – that is, without being dependent on other countries – in strategically important areas”.

Naturally, the EU cannot be truly autonomous in a world that is shaped by economic globalization and interdependence. However, it can strengthen its ability “to act autonomously” by creating strong, enduring, and mutually beneficial relationships with regions that share similar cultural and political values. The historical ties between LAC and Europe, dating back to the fifteenth century, portrait LAC as a trustworthy ally which the EU can work with on strategically important areas – such as energy and supply of critical minerals.

Recognition as equals

To achieve a green EU, the Union – like China and the United States – needs LAC. To enable stronger ties with the region, the EU should start by recognizing LAC as an equal partner. In its ambition to create more resilient, sustainable global supply chains, the EU is promoting various initiatives under the Green Deal that threaten to have considerable economic impact on developing agricultural communities in LAC countries, despite numerous requests from Mexico and Brazil, among others, to engage in a multilateral EU-LAC dialogue.

Dialogue with Latin American partners seems crucial if the EU clearly and sincerely aims to play a leading role in energy transition. The political willingness on both sides is present. But for a fruitful dialogue, equality amongst counterparts is required. China and the United States are making serious moves to further consolidate themselves as strategic partners for LAC; the EU should too.

Want to know more?

Jacob Lubbers Estradais a Trainee at Hague Corporate Affairs, specialized in EU-LAC affairs, sustainability, and agri-food. For questions you can contact him via: lubbers.estrada@hague.company.

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16 February 2024

Jacob Lubbers Estrada

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