Accelerating the energy transition would benefit the environment and the economy in Panama

A new study by the United Nations Environment Program (UNEP) shows that integrating the energy transition as part of the post-COVID-19 stimulus and recovery plans will trigger significant benefits, not only for the environment and human health, but also for the economy, including the creation of new jobs.

Drawing on concrete data and developed with a Green Economy Model, The energy transition as a key driver of the COVID-19 economic recovery in Panama demonstrates that an energy transition based on renewable energies and electrification will contribute to the growth of Panamanian GDP and employment in the short term, with substantial increases in the long run.

The study also shows how an increase in the levels of climate ambition for the post-COVID-19 recovery is directly proportional to the benefits that can be obtained over time: Economic profits double the original investment, and, in the most ambitious scenarios, they could potentially triple it. Of these benefits, 70 per cent correspond to additional gains in real GDP, 26 per cent to additional public income, and 4 per cent to additional labor income.

This represents a contribution to the Panamanian economy of US$160.650 billion compared to an investment of USD 47 billion, an additional 2.35 per cent increase in GDP, benefits of USD 2.11 to 3.4 for every dollar invested, and the creation of over 10,000 new direct jobs.

The report also shows that CO2 emissions from the energy sector could be reduced by up to 24 per cent by 2024, and that, with the elimination of fossil fuel subsidies as of 2025, savings of up to USD 3.7 billion would be generated by 2050.

“This study is particularly timely since it is key that post-COVID-19 recovery plans in Latin America and the Caribbean include measures to promote zero-emission technologies and infrastructure, which are necessary to achieve the objectives of the Paris Agreement, as well as the 2030 Agenda, and generating long-term prosperity”, said Leo Heileman, UNEP Regional Director for Latin America and the Caribbean.

“The transition of the energy sector will require significant investments, as will the recovery from COVID-19. It is crucial to unify efforts. The GEM goes beyond pointing towards the potential scenarios; it also shows their benefits and, more importantly, it provides a series of steps that we should follow, and we will follow,” said Ligia Castro de Dons, advisor at the Ministry of the Environment of Panama.

Ana Gordon Vergara, business manager of the European Union in Panama, recognized that the country is a model for Latin America and the Caribbean in terms of energy transition, and said that robust data, models and plans that lay the foundations for zero emissions trajectories are necessary to reach the reduction goal of 1.5ºC of the Paris Agreement.

She also highlighted the importance of strong partnerships and cooperation between countries and regions to increase collective efforts towards a global, green and resilient recovery from COVID-19, and a zero-carbon planet.

The study is based on the reportZero Carbon: the opportunity, cost and benefits of the coupled decarbonization of the power and transport sectors in Latin America and the Caribbean, published by UNEP in 2019, which analyses the technical and economic feasibility of a transition that is becoming ever more crucial.

“This work confirms that the proposals included in the energy transition agenda have all the potential to serve as tools for sustainable economic reactivation within the ‘Build Back Better’ vision,” concluded Jorge Rivera Staff, Secretary of Energy of Panama.

The report was developed under the leadership of the National Secretariat of Energy and the Ministry of the Environment of Panama, with the support of UNEP and the European Union.