Latin America The New Home For Green Tech Industries

The growth of Central & South America economies has led to the rapid urbanisation of many cities across the region. This has made Latin America an extremely attractive test bed for innovation and which has led to many green tech companies moving into this part of the world. Large companies outside of Latin America are seeing the opportunities which lie within the borders of this vast area, partnering with rapidly growing local clean technology firms.

Why The Move Into Latin America?

It is no secret that Latin America has an abundance of resources and with favourable regulations and government incentives, large companies are seeking to stay a step ahead of the game in the race to commercialise sustainable technology. With costs of green technologies such as solar energy falling, a favourable investment climate has emerged, allowing local market newcomers to become competitive and grow quickly. The number of green technology industries in Latin America has grown rapidly in the last 5 years due to investment, the development of technology and mainly due to large European and North American companies flocking to Brazil, Colombia and Mexico to launch green projects. Currently, there are no estimates of the current size of the sustainable technology market in Latin America however the scale of renewable energy investment shares light on the current situation. In 2013, the Climatescape report suggested that the region captured £10.2bn (USD$16.8bn) of global clean energy investment which is an impressive 6% of the world’s investment.

Growth Of Sustainable Technology In Latin America

Today, Brazil leads the way as a hydropower giant and boasts the world’s largest potential wind resources as well as a vast biomass capacity. However, Central American countries are currently experiencing a revival with Mexico challenging Brazil’s position in wind energy whilst leading the fields of solar energy in Latin America as well as having enormous geothermal reserves. The size and success of Brazil’s green energy efforts has meant that organisations such as the UK’s Technology Strategy Board leading green technology companies to Brazil in order to learn from its development and implementation.

There are a number of factors driving the growth of sustainable technology in Latin America. As the ageing services and infrastructure in cities across Latin America are up for renewal or repair, many countries within the region are turning to green solutions. The usual development issues of pollution, water shortages, waste disposal, traffic congestion and urbanisation has led to the region’s young population implementing sustainable housing solutions and the trial of mass transit systems. Another factor leading to the growth of green technology in Latin America is due to the abundance of resources as well as its geography. Natural laboratories such as those in Chile’s desert and the vast open spaces available which are free of the obstacles faced by companies elsewhere has translated into technology companies moving into Latin America.

Top-Down Rather Than Bottom-Up Innovation

Latin America is hampered by low innovation and ‘transformational’ entrepreneurs resulting in Latin American researchers sitting on the sidelines watching the European and North American companies move in. This means that some studies of R&D in the region suggesting that actual expenditure on innovation is in fact relatively low. One challenge therefore that affects the region is that it is lacking organic, bottom-up growth which would of course better the situation in Latin America.

However, some observers suggest that this is set to change as clean technology companies begin taking advantage of the ever-improving investment climate with governments and banks introducing agreeable green technology policies in the region. Many of the current energy projects taking place in Latin America do have some local involvement and is not completely fronted by international companies with national development banks such as Brazil’s BNDES playing an important role with inward investment.

The Future

As Brazil’s FIMAI Conference and Mexico’s GREEN Expo prove the region is not lacking in local ideas for clean technology. The Latin American technology companies will become extremely busy in their efforts to satisfy demand from their domestic market. Although, globalisation is the main priority of most Latin American governments, the next step in order to ensure a successful future in green technology is to increase their global market share further.

Find out more about why Latin America is a fertile ground for green technology industries in this article in the Guardian.

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