Can China Support a Just Energy Transition in Latin America? Policy Insights from a Working Paper Series

By Julie Radomski

As petroleum prices reach historic highs while solar and wind prices reach historic lows, the future of the global energy transition appears resilient. This trend continues in large part thanks to China, which leads the world in solar and wind power generation as well as low-carbon technology manufacturing and exports.

Meanwhile, Latin America and the Caribbean leads the world in the mineral reserves necessary for these industries, particularly lithium and copper, while also offering vast potential for renewable energy generation. Unsurprisingly, then, China is a key trading, investment and contracting partner for many countries in the region and has also articulated commitments to support low-carbon transitions.

Yet the region’s history with commodity booms raises a fundamental question: how can the global transition to clean energy avoid reproducing extractive patterns of the past in Latin America and ensure access to renewable energy for Latin American consumers?

A new policy brief from the Boston University Global Development Policy (GDP) Center and the Center for China and Asia-Pacific Studies (CECHAP) at Peru’s Universidad del Pacífico examines this question by synthesizing recent research on the experiences of Argentina, Chile, Colombia and Peru. The brief draws from a working paper series from experts in each of these four countries on Chinese engagement in transition minerals, green technology supply chains and renewable energy. Below are seven policy-relevant insights from the brief seeking to align China–Latin America engagement with the goals of a just energy transition.    

1. To ensure long-term development, ESG standards must be simple, not porous

Chinese firms and have become major actors in Latin America’s mining and energy sectors. A 2017 research by the GDP Center and CECHAP shows that these relationships give Latin American governments significant potential policy space to enforce higher environmental and social governance (ESG) standards. However, evidence from the working paper series shows that this potential remains largely unrealized.

The four case study countries rely on regulatory frameworks that are procedurally complex but substantively porous, allowing formal compliance to coexist with weak ESG performance. For example, in Argentina, weak enforcement of on-paper environmental assessment requirements has meant that lithium extraction projects do not adequately assess or disclose their extensive water use impacts, as is the case for the Tres Quebradas lithium project. In the absence of clear expectations and enforcement mechanisms, Chinese investors—like other foreign firms—tend to adhere to minimum requirements rather than best practices. This can contribute to environmental degradation as well as chronic conflicts between mining companies and local communities, particularly given the sensitivity of mining and some energy generation projects.

Particularly in the extractive sector, host governments should streamline and consolidate regulatory frameworks without diluting environmental and social protections. This includes requiring independent, publicly accessible ESG audits for transition mineral projects, with clear incentives for adherence coupled with capacity to enforce sanctions.

2. ESG outcomes are driven by host-country governance rather than investor nationality

Based on the experiences of Argentina, Chile, Colombia and Peru, Chinese firms’ ESG performance largely reflects domestic governance conditions, rather than diverging from other foreign investor behavior. Many Chinese companies enter both transition mineral and energy generation projects through mergers and acquisitions, following market incentives and often demonstrating a higher risk tolerance than existing firms. In some cases, however, they inherit projects already marked by unresolved social conflicts. In a copper mine in and a lithium mine , for example, Chinese mining companies are embroiled in long-term conflicts related to land use, water access and inadequate consultation. These dynamics expose investors to reputational risk and operational instability, while reinforcing mistrust at the local level.

The brief identifies insufficient due diligence and institutional learning as recurring weaknesses, especially in acquisitions of existing projects. Strengthening pre-acquisition ESG assessment is therefore critical for Chinese firms and financiers. Further, mining companies, including Chinese firms, should institutionalize mechanisms for continuous engagement with affected communities throughout the project lifecycle, recognizing that sustained communication is essential for social legitimacy and operational stability even where not required by law.

3. Just transitions must include gender in practice, not just on paper

Despite formal national commitments to gender equality, findings from the working paper series indicate that gender considerations remain marginal in the operationalization of ESG standards across mining and energy sectors in the four countries. Women are underrepresented in mining sector workforces in particular, concentrated in administrative or informal roles, and not consistently included in consultation processes. Gender-disaggregated data collection and enforcement of existing equality provisions is limited.

Because on-paper national plans are not translated into practice, women—particularly Indigenous and low-income women—often experience disproportionate environmental and livelihood impacts. The working paper series findings indicate that monitoring mechanisms and accountability structures targeting gender inclusion should be a component of a just transition, helping prevent existing inequality from being reproduced as the energy sector transforms.

4. Value-chain upgrading faces structural and political constraints

Many Latin American countries, including Peru, Argentina and Colombia, express ambitions to move up energy transition-related value chains, particularly through mineral processing and renewable technology manufacturing. However, the research highlights that fragmented infrastructure, small domestic markets and weak regional integration. Battery manufacturing illustrates these constraints: lithium itself represents a small share of total battery value, and production is typically located near electric vehicle assembly plants rather than near mines.

Until regionally-coordinated long-term investments in infrastructure, skills development, logistics and industrial policy can develop, downstream industrialization is unlikely to materialize in the near term. These constraints suggest the need for more strategic and regionally coordinated approaches to value addition.

5. Targeted engagement can help develop upstream and intermediate value creation

While downstream manufacturing opportunities may be constrained in the short term, the brief identifies some opportunities to add value through upstream supplier development and intermediate inputs. Governments can incentivize firms to source local labor and services while investing in technical education and workforce development, including through educational exchange and training programs with Chinese energy and mining companies engaged in the region. By building local skills and supply chains, these measures can generate future employment and embed the value generated from transition sectors more firmly within local economies.

6. Investor heterogeneity requires differentiated policy instruments

Chinese participation in Latin America’s energy transition involves a heterogeneous set of actors, including not only state-owned enterprises (SOEs) but also private firms with distinct incentive structures and time horizons. For instance, Chinese involvement in the copper mining and hydropower sectors in Latin America predominantly involve SOEs, while Chinese solar, wind and lithium ventures in the region are more likely to be private.

Private firms tend to be more responsive to short-term market conditions, while SOEs have been shown to exhibit a “patient capital” approach. Chile’s experience with lithium value-addition projects shows how misalignment between state-led strategy and investor time horizons can undermine policy objectives. Host-country policy therefore must use the available policy space to advance ESG standards and industrial upgrading, while also taking into account private sectors’ sensitivity to short-term factors like lithium price changes.

7. Renewable energy expansion requires a more robust pipeline of new projects

Despite in solar and wind, Chinese involvement in renewable energy generation in Latin America has largely taken the form of asset acquisition or equipment supply rather than the development of new generation capacity. A factor shaping this pattern is the limited availability of bankable, ready-to-invest projects.

One promising area for future cooperation lies in joint project pipeline development. National and regional development finance institutions in Latin America could partner with Chinese counterparts, including the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), to establish pre-feasibility study facilities in order to expand pipelines of renewable energy projects aligned with just transition objectives.

Conclusion

The evidence synthesized in the policy brief indicates that the development outcomes of the China-Latin America engagement in the energy transition can be shaped by domestic governance. Chinese capital and firms can support higher ESG standards, value-chain upgrading and renewable energy expansion in Latin America, where regulatory standards and renewable energy strategies are clear and enforceable. In contexts of weak or fragmented regulation and coordination, however, transition mineral and energy projects risk fueling social conflict and environmental harm while perpetuating extractive dependence.

The path forward requires centering just energy transition principles within domestic frameworks. It means treating environmental protection, social inclusion and local value creation as core policy goals rather than secondary outcomes of growth in transition sectors.

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