Total cumulative additional investments in the energy transition agenda (ETA) and zero carbon scenarios for Panama reach US$4.57bn and US$8.81bn, respectively, by 2024.

The outlook is part of an assessment conducted by the UN Environment Program in collaboration with the country’s environment ministry and energy department that looks at energy transition’s role as part of post COVID-19 economic recovery.

The two amounts are 26.19% and 50.84% higher relative to the business-as-usual (BAU) scenario.

In general terms, BAU reflects a continuation of historical trends with no new policies introduced and no particular emphasis on low carbon development; ETA considers the government’s current energy plans and other planned targets and policies; and zero carbon is the most ambitious with the decommissioning of coal and natural gas-fired power plants.

The bulk of investment in the ETA and zero carbon scenarios would go to electromobility followed by power generation.

By 2024, the share of non-conventional renewable energy would hit nearly 19% of installed capacity under ETA and almost half in the zero-carbon scenario.

Under both scenarios, large hydropower would continue to buttress supply while the participation of diesel, fuel oil and gas would fall.

“In the ETA3 Scenario, every US dollar that Panama invests in energy transition can bring returns as high as US$2.11, reaching the payback period in eleven years. On the other hand, in the Zero Carbon3 Scenario, for every US dollar that Panama invests in decarbonizing its energy sector, US$3.4 of economic benefits are achieved, reaching the payback in six to seven years,” highlights the report.

The assessment recommends including low-carbon investments in the post-COVID-19 economic recovery package, focusing on creating the necessary market conditions to grant certainty to the private sector; designing incentives and programs to stimulate private investment and the creation of supply chains; eliminating subsidies for fossil fuels; developing industrial policies, training and education programs; and developing a strategy to ensure a just transition that helps minimize the impact on labor.