Since the 2000s, a series of large-scale economic transformations have unfolded on a global scale, which had among its central elements the consolidation of the process of greatest concentration of wealth known in Western modernity (Piketty, 2015; Milanovic, 2017), associated with the financialization of commodity derivatives markets (Lapavitsas, 2011) and which in 2008 culminated in the biggest global economic crisis since 1929 (Marichal, 2013)     

Especially regarding commodities, the total value of commodity index-linked instruments purchased by institutional investors increased from an estimated US$15 billion in 2003 to US$200 billion by mid-2008 (Tang and Xiong, 2012), coinciding with the peak of the housing bubble crisis and speculation in the energy market, which caused uncontrolled increases in energy and food costs (Masters, 2008; Poveda Avila, 2016). Under these dynamics (and coupled with increased demand from the BRICS countries), the price of a barrel of crude oil reached a record high of US$147 in mid-2008. 

The financialization of energy prices coincided with a wave of progressive governments, especially in South America, which deployed as a central strategy an aggressive policy of capturing the extraordinary rent (Campodónico, 2008) generated by the combination of greater state intervention in the economy and the exponential growth of energy prices at the international level (Serrani, 2013; Barrera, 2013). 

Undoubtedly, this was a period of fiscal prosperity for Latin America, centered on a combination of strong global trade expansion, rising commodity prices, and a considerable improvement in the terms of trade (Campodónico, 2009), the dynamism of foreign exchange flows, and the high level of remittances sent by migrant workers, as well as a sustained trade surplus (Jenkins, 2011; Ocampo, 2009). In many cases, this resulted in a substantial improvement in social indicators and a reduction in poverty (ECLAC, 2013), although it did not lead to a transformation of the economic structure, which was highly dependent on the export of primary products; on the contrary, it tended to reinforce it (Fernández et al., 2017). 

The 2010s ushered in a period of uncertainty regarding the international dynamics of the energy market and the evolution of financialization in commodity markets. The international subprime mortgage crisis, which originated in the United States in 2008 and was replicated in the European Union in 2012, generated negative impacts on prices, leading the energy sector to face three types of challenges:  

a) Price volatility: In addition to the persistence of armed conflicts (Fuser, 2017), the increase in demand from emerging countries and the lower growth of central countries, there is the shale revolution in the United States, which pushed the international price of crude oil down and, in contrast, the production cut decided by some of the OPEC exporting countries to sustain the price and their income.

b) Climate change and decarbonization of the global economy: the greater influence of climate forums on the energy agenda and the mitigation commitments assumed at the national level that involve a greater participation of renewable energy sources and energy efficiency policies (Bertoni and Román, 2013).

c) Technological changes: the unconventional exploitation of hydrocarbons, through hydraulic fracturing (fracking) and horizontal drilling techniques; the rapid fall in the costs of renewable technologies driven by China's leadership and scale; the expansion of the liquefied natural gas (LNG) trade, which in many cases competes with pipeline transport; the electrification of transport, the use of smart grids and storage systems (Bonilla et al., 2015).

This context coincides with a marked shift to the right in the region, which was consolidated with the recent election of Jair Bolsonaro as president of Brazil. This process began in 2009 with the coup d'état in Honduras against Manuel Zelaya and continued through democratic means in other countries of the region: Panama, Guatemala, Argentina, Haiti, Ecuador, Chile, Peru, Costa Rica, and Paraguay (the most notable exceptions being López Obrador in Mexico and Sánchez Cerén in El Salvador). In addition to these transformations in the political sphere, there are other specific changes in the energy sector that warrant study and will be the focus of the Working Group's work. 

First, there is evidence of a shift from a period of high energy commodity prices to one characterized by international price instability and a marked downward trend, exacerbated by the financial and fiscal crises of countries dependent on energy exports and strong disputes over the capture of hydrocarbon revenues between national states and large multinational companies. 

Secondly, alongside the rightward shift and its policies of austerity and structural adjustment, transformations have been evident in the forms of state intervention in the economy and the role of public energy companies, putting limits on the expansion of the coverage of public energy services (Recalde, 2016) as mechanisms to reduce poverty and improve income distribution. 

Third, the regional institutional framework established in the first decade of the 21st century (UNASUR, ALBA, CELAC) has eroded. This erosion has led to the dismantling of many regional energy and economic integration projects in favor of prioritizing free trade agreements (Trans-Pacific Partnership, Trade in Services Agreement -TISA-, Mercosur-European Union Agreement), highlighting a substantial lack of strategy for improving intraregional cooperation and strategic complementarity. Furthermore, the crisis in bilateral energy relations and the failure to materialize certain multilateral energy projects have resulted in what some authors refer to as a process of “energy disintegration.” Another factor has been the expansion of extra-regional LNG trade, which has generated less interest in new regional gas interconnection projects (Sabbatella, 2018; Sabbatella and Santos, 2019).

Fourth, with the end of “easy oil” (Bardi, 2009), a new oil revolution has emerged, driven by the widespread adoption of unconventional techniques in the exploitation of fossil fuel resources (such as tight and shale oil). This has not only transformed energy geopolitics, fostering a new American diplomacy while simultaneously establishing the United States as a major global energy exporter, but has also given rise to a significant number of technological, social, and environmental challenges stemming from the use of these new hydrocarbon extraction techniques.

Finally, and related to the previous point, the last decade has seen the strengthening of a new energy diversification agenda (Yañez and Garrido Lepe, 2017) that seeks to transform national energy matrices towards environmentally sustainable models by promoting the use of renewable energies at the expense of fossil fuels, and fostering strategies for the efficient and rational use of energy. This process was reinforced by the consensus reached at the 2015 United Nations Climate Change Conference, although it has been threatened by the US foreign policy of denying and breaking with that consensus.

The relationship between the exploitation of natural resources and economic development strategies in Latin America and the Caribbean (LAC) has been a subject of much debate in the Social Sciences for more than half a century.

Latin American structuralism was one of the first movements that, using native categories, sought to understand the particularities of development based on the center-periphery concept. Given the significant relevance of raw materials to the total value added of the economy and its export structure, it argued that Latin America and the Caribbean (LAC) should industrialize because, in the long run, the relative prices of manufactured goods tended to increase more rapidly than those of primary products. This implied a strengthening of the disadvantage faced by underdeveloped countries on the periphery compared to developed countries on the center (Prebisch, 1949), thus undermining the neoclassical hypothesis of convergence as the ultimate outcome of development strategy (Rostow, 1959). Regional integration became a key factor in creating a larger market, sustaining industrialization and diversifying the productive structure, seeking greater autonomy and freedom from extra-regional powers, as well as promoting economic development and diversification of the regional productive structure (Briceño Ruiz, 2012).

In the 1960s and 70s, dependency theory took shape, problematizing the center-periphery relationship from a critical theory perspective. This theory asserted that underdevelopment is a constitutive part of the expansion of industrialized countries; that is, it is neither a stage nor a precondition in a gradual process toward development, but rather a condition in itself (Blomström and Ente, 1990). While various authors have distinguished stages in the history of Latin America and the Caribbean (LAC) in terms of dominant production relations and the reproduction of poverty (Sunkel and Paz, 1975), Cardoso and Faletto (1969) early on identified the agrarian structure, mining, and its energy derivatives as central focuses of dependency relations with respect to the needs of European metropolises. In this sense, the problems of underdevelopment in LAC are not limited to the economic foundations and integration into the international market, but extend to the social structure and long-standing capitalist relations (Wallerstein, 1979). 

At the same time, in developed countries, the idea that the mere presence of natural resources could be detrimental to economic development was taking shape. This began with the discovery of natural gas in the Netherlands in 1959, which gave rise to the concept of the “Dutch disease” (Corden and Neary, 1982). This concept argued that the new boom in the Dutch energy sector had generated extra foreign exchange earnings that appreciated the currency, reduced the competitiveness and dynamism of its manufacturing industry, and led to an incipient process of deindustrialization. This idea was further reinforced by the analysis of the poor development trajectory of OPEC oil-exporting countries after the 1973 oil crisis. In this direction, Richard Auty (1993) coined the term “resource curse” to present the hypothesis that in recent history countries rich in natural resources had had serious difficulties in taking advantage of these assets to develop, a hypothesis supported by the work of Sachs and Warner (1995), which showed the negative relationship between abundance of natural resources and GDP growth between 1970-1990 in a wide sample of countries.

Indeed, recognizing the structural obstacles to development in peripheral countries and generating theoretical and political alternatives to overcome them has been a constant theme in the social sciences of Latin America and the Caribbean (LAC) in recent decades. In response to the conclusions of the Club of Rome's 1972 report, "Limits to Growth," and the identification of the physical limits to global development, a series of responses emerged, focused on the social and economic limitations of the dominant development model. These responses came from regional institutions such as the Bariloche Foundation, the Venezuelan Center for Development Studies, and ECLAC (Economic Commission for Latin America and the Caribbean). These approaches sought to capture the specific characteristics of each country in order to generate more appropriate recommendations that would modify the prevailing patterns of underdevelopment (Gligo, 2006). One of the main contributions of this approach was the articulation of economic and environmental considerations, based on a critique of the high levels of consumption in developed countries compared to peripheral ones, which became one of the causes of environmental degradation (Haidar, 2016). Fundamentally, the focus was on the widespread use of oil as the main energy source of the prevailing urban-industrial style of capitalism (Alvarado, 1983). 

However, it wasn't until 1987, with the Brundtland Report prepared by the World Commission on Environment and Development, that the conventional definition of sustainable development was established: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). Along these lines, the report prepared jointly by ECLAC, OLADE, and GTZ (2003) recognizes four dimensions of sustainable development related to energy: economic, political, social, and environmental. 

Energy production and consumption are inseparable from the growth of any economy and are closely linked to industrialization and increased productivity, as well as to the social well-being of the population. Following the two world wars, the expansion of the global capitalist system during the 20th century (Guzowski et al., 2016) was made possible by the energy provided by oil and its derivatives; therefore, control of these sources became a central element of national security for developed countries. Due to its finite nature, from the 1950s until recently, the timing of peak oil production was a subject of debate. However, recent innovations in hydrocarbon extraction techniques from unconventional reservoirs have alleviated fears of scarcity, shifting the focus of the debate to global warming caused by the use of fossil fuels (Carrizo et al., 2016). In this context, the concepts of peak oil demand (Dale and Fattouh, 2018) and energy transition have gained significant traction. An energy transition, understood as “a structural change in the system of energy provision and use” (Carrizo et al., 2016: 25), occurs as a consequence of technological and economic transformations, but is also the product of long-term political decisions. Under the influence of global climate change, the energy transition refers to the shift from the dominance of fossil fuels to that of renewable energy sources. According to the International Energy Agency, the energy sector accounts for two-thirds of total greenhouse gas (GHG) emissions and 80% of CO2 emissions. Therefore, not only must any effort to reduce emissions and mitigate climate change include the energy sector, but energy must also be a central factor in discussions about development models for the coming decades.  

Two climate agreements stand out among those seeking to transform energy policies globally. First, the Paris Agreement, adopted in 2015, was agreed upon by virtually every country in the world to reduce greenhouse gas (GHG) emissions, limit global warming, and mitigate its most severe impacts (increased droughts, floods, and severe storms). The Agreement requires each Party to prepare and communicate its Nationally Determined Contribution (NDC), a plan to reduce emissions. The energy sector plays a crucial role in this plan, not only due to its contribution to current emissions but also because many mitigation measures incorporate the expansion of renewable energy and energy efficiency. Second, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development (2030 Agenda), adopted by the United Nations in 2015, include a specific goal related to energy (SDG 7). This aims to provide universal access to modern energy services, double the rate of improvement in energy efficiency and increase the share of renewable energy in the global energy mix by 2030. 

In this energy transition scenario, natural gas is gaining relevance as a clean alternative to fossil fuels, producing approximately half the CO2 emissions of coal and complementing renewable energies given the variability of wind, solar, and hydroelectric power generation. Furthermore, the global gas market is evolving rapidly due to two revolutions: the US shale gas revolution and the liquefied natural gas (LNG) revolution (IEA, 2017), processes that are gradually transforming natural gas into a global commodity (Boersma and Losz, 2018).

Indeed, within the context of global transformations surrounding peak fossil fuel demand, the pressure to reduce GHG emissions to combat climate change, and the promotion of renewable energy sources associated with a gasification of the global energy matrix that is rapidly transforming international geopolitical relations, this Working Group aims to study the specific characteristics of the energy policies adopted in Latin America and the Caribbean (LAC) and their effects in understanding the region's current development patterns and main obstacles. To this end, historical issues such as security of supply and access to energy; rent-seeking by producing countries and the impact on the trade balance for importing countries; the socio-environmental impacts of energy production and consumption; the role of state-owned enterprises and foreign direct investment; the development of endogenous industrial capabilities; and technological dependence will be considered. Furthermore, at the regional level, it is essential to include energy as a driving force behind numerous bilateral and multilateral integration projects. Finally, it is important to note the growing influence of the climate change agenda on sectoral policy. Within this framework, the challenges and opportunities presented by the energy sector in the region will be analyzed. To this end, the study will seek to integrate national case studies, bilateral relations, and multilateral integration frameworks.