From Resource Curse to Renewable Futures? Chinese Investment and a Just Transition in Latin America

Latin America’s wealth of transition minerals positions it as a key supplier of the raw materials necessary for renewable energy generation. However, despite GDP growth due to commodity exports, past resource cycles in Latin America have resulted in environmental degradation, social conflict and economic fragility rather than broad-based development.

Therefore, a just energy transition in the region requires efforts to move beyond raw resource extraction toward well-regulated commodity sectors. Equally important, it must ensure that the benefits of renewable energy generation and related technologies are broadly shared, with equitable access to the opportunities and resources generated across social groups.

A new policy brief  by Julie Radomski, Rebecca Ray, Cynthia Sanborn and Sergio Serrano aims to distill lessons and generate actionable recommendations for steering the China–Latin America relationship toward a just energy transition. The paper summarizes findings from a working paper series produced by the Universidad del Pacífico Centro de Estudios Sobre China y Asia-Pacífico (CECHAP) and the Boston University Global Development Policy Center, looking at national trends and policy frameworks in four Latin American countries—Argentina, Chile, Colombia and Peru—in energy transition-related sectors with particular attention to Chinese engagement.

Main Findings

• The four countries examined in the reports illustrate the diversity of approaches to developing national strategies and regulatory frameworks that might steer Chinese involvement in transition minerals and renewable energy sectors toward sustainable and inclusive outcomes.
  • For example, Peru stands out for its relatively strong formal regulatory frameworks for mineral exploration and extraction, but is at the earliest stages of the four in terms of developing a national energy transition strategy;
  • Chile has advanced the furthest of the four countries at the level of national strategy for energy transition, but this has not translated into significant domestic industrial capacity.
• Despite their differences, the four national cases reveal common challenges that limit the effectiveness of their existing regulatory and strategic frameworks with relation to Chinese companies.
  • In some cases, Chinese mining and renewable energy companies get involved in projects with remaining environmental and social conflicts surrounding existing mines. With limited experience in specific national contexts, this can heighten the firms’ vulnerability to community opposition and reputational risks.
• Beyond investment in existing projects, Chinese firms’ presence has great potential to grow. Chinese public development finance institutions (PDFIs) have the potential to leverage their policy-oriented mandates to support the energy transitions in Latin American countries, including engagement of local stakeholders through the Belt and Road Initiative (BRI) green development framework.
  • However, today this potential is largely untapped, as fossil fuel exploration and extraction account for over 60 percent of Chinese PDFI energy lending in Latin America, followed by hydropower at nearly 30 percent, with no new lending in recent years.

Policy Recommendations

• Establish clear and robust ESG expectations for firms and governments in the mining sector.
• Strengthen participation and accountability mechanisms throughout project lifecycles.
• Improve technical capacity and access to education for citizens in mining countries, with an emphasis on gender equality at a local level.
• Move beyond national-level strategies to develop coordinated regional policies that would expand production scale and efficiency.
• Work jointly towards developing a pipeline for new renewable energy projects.

Ultimately, Latin America’s ability to translate global demand for transition minerals into sustained and inclusive development depends primarily on domestic governance capacity. Looking ahead, it also depends on how external partners engage with these local frameworks, with complex realities on the ground. The hope is that strong institutions and responsive partnerships can align resource wealth with long-term development goals.

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