Financing the Energy Transition in Latin America: the Role of Multilateral Development Banks

The need to transform the energy matrix in the face of climate change demands the financing of strong investments in infrastructure, transportation, and productive capacity. Multilateral development banks (MDBs) are influential political and economic stakeholders that finance and mobilize green resources, but the literature has not extensively studied their financing in Latin America. This paper aims to identify and systematize some of the main trends regarding the role of multilateral banks in financing the energy transition in this region. Based on recent secondary sources, we analyze the relationship between climate financing and energy transition, reconstructing the trends of the main MDBs in Latin America, as well as their commitments and recommendations for financing that sector. We find that multilateral climate financing is insufficient to address regional needs in terms of energy transition. The historical record of assistance and standing commitments predict a growing role for MDBs, not exclusively in financing. It is less clear whether their conditionalities and recommendations, together with their role as financing catalysts, will overcome the tensions observed in their previous historical interventions in developing countries.