Introduction

Latin America and the Caribbean (LAC) combines relatively clean electricity systems and substantial renewable, land-use and critical-mineral opportunities with continued fossil-fuel dependence, infrastructure gaps, climate vulnerability and uneven financial-market development. The report establishes a regional baseline of public and private climate finance from 2020–2024, examining sources, instruments, climate uses and sectors to identify investment gaps and opportunities.

Methodology

CPI applies its established Global Landscape of Climate Finance methodology, based on the UNFCCC Standing Committee on Finance definition. It tracks primary domestic and international public and private capital supporting mitigation, adaptation and resilience, while addressing double counting. Government climate expenditure data were available for only 10 of 33 LAC countries, illustrating material data limitations.

Climate finance needs in LAC

Estimated mitigation investment needs for 2025–2030 are USD 467–847 billion annually, averaging USD 614 billion. AFOLU has the largest average requirement at USD 193 billion annually, followed by energy systems at USD 156 billion and transport at USD 138 billion. These estimates exclude adaptation and some mitigation sectors, meaning total requirements are higher.

The financing gap is particularly pronounced in industry and transport. AFOLU also remains substantially underfunded outside Brazil despite its importance to regional emissions and economic activity.

Climate finance flows in LAC

Tracked climate finance doubled between 2020 and 2024, reaching USD 108 billion in 2024, but growth recently plateaued. Brazil accounted for more than half of regional flows. Mitigation dominated, receiving USD 85 billion in 2024, while adaptation remained comparatively limited.

Financing structures vary considerably. Brazil and Mexico have stronger domestic financing bases, while smaller and more constrained markets rely more heavily on international public capital. Market-rate debt dominates most subregions. Continued fossil-fuel investment also indicates that redirecting existing finance is necessary alongside mobilising additional capital.

The Caribbean

Climate vulnerability, small markets, high capital costs and constrained fiscal space limit investment. Private international finance remains particularly limited. Adaptation and disaster-risk instruments—including catastrophe insurance, debt clauses and resilience-linked structures—are comparatively important, while regional initiatives can aggregate projects and reduce transaction-size barriers.

Central America and Mexico

Central America remains anchored in international public finance, although domestic financing is increasing, particularly for buildings, infrastructure and renewable energy. Mexico has deeper domestic markets, with corporations, households and commercial banks financing renewable energy and low-emission infrastructure. Sovereign sustainable debt and climate budget tagging support capital-market mobilisation.

South America

Outside Brazil, adaptation and dual-benefit finance has a comparatively prominent role, including biodiversity conservation, disaster-risk management and nature-based solutions. Chile and Colombia demonstrate the use of sovereign thematic bonds. Brazil is distinguished by domestic private finance, substantial AFOLU financing and household and retail lending for distributed solar.

Recommendations for scaling climate finance in LAC

CPI recommends converting climate plans into investable roadmaps, aligning fiscal policy and budgets with climate objectives, and expanding instruments that create fiscal space. Markets should be strengthened through guarantees, hedging, local-currency finance, interoperable green taxonomies, disclosure requirements and aggregated investment-grade portfolios.

Financial institutions should mainstream physical climate risk into lending, investment and portfolio management and develop resilience-focused products. Further priorities include scaling renewables, electrification, energy efficiency, low-carbon transport, sustainable agriculture and nature-based solutions, while strengthening institutional capacity, partnerships and decision-useful climate data.