New CPI research points to real momentum behind the region’s energy transition and a clear opportunity to accelerate it by redirecting existing capital and mobilizing new climate finance.
London, 22 September 2026 – Climate finance flowing to Latin America and the Caribbean (LAC) doubled from USD 54 billion in 2020 to USD 108 billion in 2024, according to new research from Climate Policy Initiative (CPI), signaling strong momentum in a region where renewables already supply close to 60% of electricity, more than twice the global average. Yet fossil fuel investment reached USD 95 billion in 2024, more than twice the USD 43 billion in climate finance tracked for energy systems. The findings point to a clear opportunity: redirecting existing capital, alongside mobilizing new resources, could accelerate the region’s climate transition.
The Landscape of Climate Finance in Latin America and the Caribbean is the first comprehensive baseline of climate finance flowing to and within the region, covering public and private, domestic and international sources. The analysis disaggregates climate finance across South America, Central America and the Caribbean, with Brazil and Mexico examined separately.
“Climate finance in Latin America and the Caribbean (LAC) has doubled. The key question now is whether finance is reaching the investments that can drive the region’s climate transition while delivering broader economic and development benefits,” said Barbara Buchner, Chief Executive Officer, Climate Policy Initiative. “The region has significant pools of domestic capital, growing private-sector interest, and major investment opportunities across energy, transport, agriculture, and nature. The priority now is to mobilize funding at scale, by reducing barriers to investment and better connecting available finance with bankable opportunities.”
Finance is growing but the biggest investment gaps remain
Climate finance reached USD 108 billion in 2024, up from USD 54 billion in 2020. However, flows were broadly flat compared with 2023, when they reached around USD 110 billion.
The gap is particularly pronounced in sectors that will be critical to the region’s transition. Based on estimated mitigation needs through 2030:
- Industry is receiving around 26 times less climate finance than estimated needs.
- Transport is receiving around 25 times less.
- Agriculture, forestry and other land use (AFOLU) receives more than seven times less than estimated regional needs. Excluding Brazil, where agriculture is a major recipient of climate finance, the gap between current flows and estimated needs is 125 times, despite the sector accounting for 54% of LAC’s greenhouse gas emissions.
These gaps highlight the importance of moving beyond simply increasing the volume of climate finance to improving its allocation and developing investable opportunities in underserved sectors and markets.
The transition also represents a major economic opportunity for LAC. The potential economic co-benefits of the region’s climate transition are estimated at more than USD 15 trillion through 2050, or around USD 577 billion annually, more than five times the climate finance tracked in 2024. Unlocking these opportunities will require capital to be directed towards the sectors, projects and markets where it can deliver both climate and economic benefits.
Fossil fuel investment remains a major part of the capital picture
The scale of fossil fuel investment points to the potential for capital reallocation alongside the mobilization of new resources.
In 2024, around USD 95 billion was invested in fossil fuels in LAC, compared with USD 43 billion in climate finance for energy systems. While the energy transition requires substantial new investment, the findings also point to the importance of aligning broader financial flows with climate objectives and creating viable alternatives for investors.
LAC already has strong foundations for a low-carbon energy transition. Around 60% of the region’s power mix comes from renewable sources, more than twice the global average, with hydropower accounting for around half of clean energy generation. At the same time, reliance on hydropower creates exposure to drought and climate variability, increasing the need for investment in diversified renewable generation, grids, storage and resilience.
The region also has opportunities to build green and resilient value chains as well as sustainable industries around its natural capital, forests, biodiversity, freshwater resources and critical minerals.
Existing capital could play a bigger role in the transition
The region is not starting from a position of limited capital. Around 69% of tracked climate finance in 2023/24 came from domestic sources, demonstrating the importance of local financial systems and investors in scaling the transition.
Domestic capital is particularly significant in Brazil, which accounted for 58% of tracked LAC climate finance in 2024, with domestic actors providing around 90% of its climate finance. Brazil’s climate finance also grew at a 28% compound annual growth rate since 2020, largely driven by solar installations and climate-aligned agriculture.
Similarly, Mexico draws around 64% of climate finance from domestic sources. In Central America, the domestic share increased from around 10% in 2021/22 to 34% in 2023/24, indicating growing potential for local financial systems to support climate investment.
However, private capital remains concentrated in more mature markets. Outside Brazil, Mexico and Chile, public actors provided 60% to 84% of climate finance in 2023/24, highlighting the continued role of public finance in developing markets, reducing risks and creating conditions for greater private investment.
This creates an opportunity for governments, financial institutions and private investors to work together to surface financing opportunities across sectors, countries and financial instruments, strengthen project pipelines and use public and concessional capital more strategically to crowd in private investment.
Adaptation remains underfunded
Finance for adapting to climate impacts remains a relatively small share of overall climate finance.
Adaptation accounted for just 11% of tracked climate finance in 2023/24, reaching USD 12.5 billion in 2024. By comparison, mitigation finance reached USD 85 billion, more than doubling from 2020, while adaptation finance grew by 56% over the same period.
The gap is particularly important as climate impacts increasingly affect infrastructure, agriculture, energy systems and economic activity across the region. Mainstreaming physical climate risk into investment decisions and developing insurance and resilience-linked financial products, as well as climate-resilient infrastructure, will be critical to protecting existing and future investments.
Making climate investment bankable is key
The report identifies several structural barriers that continue to constrain climate investment, including high capital costs, macroeconomic and political volatility, fragmented regulatory environments, weak project aggregation, gaps in energy and transport infrastructure, and limited capacity to develop investment-ready projects.
At the same time, there are signs of growing market depth. LAC accounted for around one-quarter of emerging-market green bond issuance in 2024, with Chile, Mexico and Brazil among the leading issuers.
CPI identifies five priority recommendations for closing the investment gap:
- Plan for and align finance with the climate transition.
Translate national climate commitments into clear investment roadmaps, strengthen climate budget tagging and align fiscal and corporate transition strategies with climate objectives. - Create markets and mobilize private capital.
Use guarantees, foreign-exchange and local-currency solutions, sustainable finance taxonomies, disclosure frameworks and other tools to reduce investment barriers and risk. Stronger project aggregation, matchmaking and bankable pipelines can help connect investors with opportunities. - Mainstream climate resilience.
Integrate physical climate risk into investment decisions and develop financial products that can help protect assets and communities from increasing climate impacts. - Leverage decarbonization and green business opportunities.
Scale investment in renewable energy, electrification, grids and storage, while developing opportunities in sustainable agriculture, nature-based solutions, low-carbon transport and responsible critical-mineral value chains. - Strengthen the climate finance ecosystem.
Build institutional capacity, country platforms and decision-useful data systems that can coordinate public and private actors, identify investment opportunities and support better-informed financial decisions.
Press contact:
Rob Kahn
Director of Communications
Rob.Kahn@Cpiglobal.org
