Competition in the Energy Sector: Recent Developments in Latin America

CPI COLUMNS OECDBy Paulo Burnier da Silveira and Thaiane Abreu1

 

Introduction

The energy sector has been under the careful watch of policymakers and competition authorities. It is an industry with particular characteristics that justify a special degree of attention, including the importance of guaranteeing a reliable energy supply, as well as environmental considerations, non-storability (in most energy markets), homogeneity, and inelasticity of consumer demand. The OECD has discussed some of these issues in past years, which provides useful insight to assess the challenges and possible solutions related to competition issues in the energy sector.2

Governments around the world have joined in a global effort to achieve net-zero emissions by 2050, which will require substantial investments and a transformation of the traditional energy business model. The International Energy Agency (IEA) believes that a new energy economy is emerging.3 This is understandable when considering that the energy sector is responsible for 73% of global greenhouse gas emissions, representing energy demand in electricity, transport, and for industry. The main sources of such emissions in the energy sector are fossil fuels, such as coal, natural gas, and oil.4

The emergence of electric cars is a concrete illustration of this energy transformation: sales reached a record of 3 million units in 2020, up 40% from 2019 despite the COVID-19 crisis that reduced overall car sales by 16%. Certain scenarios predict that…

ACCESS TO THIS ARTICLE IS RESTRICTED TO SUBSCRIBERS

Please sign in or join us
to access premium content!