Energy transition outlook: Americas

Diverse and nuanced energy transition pathways are emerging across the Americas. North America is a leader in decarbonisation policies, driven by the US Inflation Reduction Act, Canada's net zero goal and multiple state and provincial level net zero goals. In Latin America, the picture varies. In Brazil, for instance, Petrobras’ latest five-year guidance has allocated over US$6 billion in investments in low-carbon supply spanning biofuels, CCUS and low-carbon hydrogen. Conversely, fossil fuels remain stubbornly high in Argentina in our base case outlook to 2050, due to the impact of political and economic instability.

So, what does all of this tell us about the pace of change in the region? Our energy transition outlook (ETO), part of our Energy Transition Service, maps three different global energy transition scenarios, with increasing levels of ambition. And our regional updates delve into the detail at the country-level. Fill in the form to access a complimentary copy of the executive summary of the global ETO, plus an extract from the Americas update. And read on for four key themes for the Americas.

1. North America’s energy-related emissions will more than half by 2050

Our base case outlook for North America (US, Canada and Mexico) expects energy-related emissions to fall by 52% by 2050 compared to 2022 levels. Hydrocarbons will retain a 67% share of demand, while low-carbon hydrogen will expand rapidly to form around 8% of the energy mix. Total carbon, capture, utilisation and storage (CCUS) capacity for North America reaches 750 Mt.

However, if we look solely at Mexico, net energy-related emissions increase by 32% by 2050 over 2023 levels in our base case. With a young, expanding population, energy demand in Mexico is set to expand by 40% through 2050, while GDP is on a trajectory toward exceeding 3% growth. Dramatic change is required across the fuel mix and abatement options to get onto a net zero pathway.

2. North America is a hot spot for investments in emerging energy technologies

To reach net zero by 2050, renewable energy, nuclear and low-carbon hydrogen need to expand rapidly. A favourable policy environment is driving progress. North America will have a 21% share of low-carbon hydrogen projects by 2030 and 60% of global CCUS capacity will be concentrated in the US.

The US and Canada are also leaders in advanced nuclear design, research and go-to-market strategies. The leading nuclear small modular reactor (SMR) companies are based in the US, including NuScale and TerraPower. Canada is planning to invest in four GE-Hitachi nuclear SMRs and has one of the largest pre-development SMR pipelines globally.

Lack of progress on low-carbon infrastructure is one of the largest roadblocks to expanding zero-carbon supply and carbon abatement technologies. For example, the pipeline for renewable power projects waiting for grid connections has exceeded 2 GW since 2020 in the US. Policies that incentivise cost-sharing, hybrid wind, solar and energy storage portfolios and faster permitting must expand to put the region on track for a net zero 2050 scenario.

3. Brazil’s energy mix must change dramatically on a net zero pathway

As the largest energy market in Latin America, Brazil has an outsized influence on the pace of decarbonisation within the region. In our base case outlook, net energy-related emissions fall by 26% by 2050 compared to 2023 levels. Fossil fuels decline marginally from a 57% share of demand in 2023 to 48% by 2050.

To reach net zero, Brazil’s energy mix must change quickly. Electrification of industry, transport and the residential, commercial and agriculture (RCA) sector pushes out bioenergy in this scenario. Oil consumption peaks around 2040.

For an at-a-glance look at Brazil’s energy transition fill in the form to access the complimentary extract.

4. Colombia faces a delicate energy transition balancing act

Colombia finds itself at the forefront of energy transition discussions, with a new government committing to ambitious goals toward replacing coal, oil and gas with cleaner sources of energy. However, as Colombia’s economy and infrastructure are deeply intertwined with oil and coal production this will be a delicate balancing act.

Similar to other Latin American markets, reaching net zero is possible for Colombia – but will require a large shift in the investment outlook for the energy sector. In our net zero by 2050 scenario, CCUS capacity scales to 32 Mt while low-carbon hydrogen reaches a 10% share of the transport mix and meets around 40% of industrial sector demand.

The full ETO Americas update explores key themes, including:

• What it will take for Mexico to realise a net zero pathway
• Brazil's outlook for natural gas demand across three energy transition pathways
• The power infrastructure required to unlock low-carbon power supply in Chile
• The future of gas capacity in Argentina's power sector
• And more. 

Access a complimentary copy of the executive summary of the global ETO, plus an extract from the Americas update, by filling in the form at the top of this page.