Assessing the potential for energy efficiency improvements in Latin America and Caribbean

Abstract

This study assesses energy intensity trends in the Latin America and Caribbean region, identifies key regional drivers for energy efficiency improvements, and proposes policy recommendations using a rich panel dataset of 25 Latin American countries over the last 20 years. The results of the Fisher Ideal Index Decomposition, followed by the regression analysis, demonstrate that sectoral energy efficiency improvements account for most of the historical energy intensity declines in the region, also highlighting the importance of energy prices and regulatory policies. Counterfactual simulations show potential for significant improvements in otherwise stagnant energy intensity in the region by eliminating fossil fuel subsidies and achieving better national planning, strengthening implementation and governance capacity, and improving access to energy efficiency financing mechanisms.