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Many Latin American countries are expanding gas capacity without adequate justifications and beyond demand projections under current policies and decarbonization scenarios, increasing the risk of propping up the gas industry past its peak.
This working paper illustrates cases in Colombia and México where continued development of gas infrastructure risks gas “lock-in”.
Within a growing global demand for gas over the last decade, Latin America has seen inconsistent political and market signals regarding interest in accessing and using fossil methane (natural) gas. Despite widespread government goals of fuelling economic and social development through gas infrastructure, projects face many hurdles to get gas flowing. Sometimes, governments absorb cost overruns and remain trapped in bureaucratic rigidity; at other times, legacy gas infrastructure provides enough justification for continued building. This signals a growing risk of institutional carbon lock-in, where powerful public and private actors create dynamics that perpetuate the production and use of fossil fuels, even against technological and market trends.
To identify causes and effects of this divide, this working paper explores financial, regulatory and political drivers and obstacles involved in developing gas supply infrastructure projects in Colombia and México. It finds that supply momentum, the political and financial muscle of state-owned enterprises and a lack of robust energy demand planning are the critical factors increasing gas lock-in risks and associated outcomes, including overbuilding infrastructure.
The authors are grateful for the valuable feedback and guidance provided by Ploy Achakulwisut and the anonymous reviewer of this report.
Initiative / The Carbon Lock-In Initiative seeks to uncover and address the barriers that uphold the fossil fuel-based economy.
Initiative / Esta iniciativa busca descubrir y abordar las barreras que sostienen la economía basada en combustibles fósiles.
SEI report / Amid growing momentum to link fossil fuel production and climate goals, transparency on countries’ alignment with Paris goals is crucial to assessing progress.
Other publication / Countries will, in aggregate, produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C.
Feature / SEI researchers offer a deep dive into the concept of carbon lock-in and its effects in Latin America, where economies are entwined with fossil fuel production.
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