In recent years, renewable energy in Costa Rica has become a global beacon of sustainability, proving that a small nation can lead the way in renewable energy and sustainable development. Over the past five years, Costa Rica’s historic achievement of generating 98% of its electricity from clean sources has solidified its position as a leader in renewable energy in Latin America. This extraordinary feat is a testament to the country’s commitment to environmental preservation and its forward-thinking approach that intertwines sustainable practices with economic growth. Highlighted in the 2024 Economy and Development Report (RED) by CAF, Costa Rica has redefined what it means to be environmentally responsible while fostering a thriving economy.
A Commitment to Clean Energy
Costa Rica’s push for clean energy is rooted in the belief that sustainability is the key to environmental preservation and long-term economic prosperity. The country’s energy mix primarily includes hydropower, wind, solar, and geothermal energy. With abundant natural resources, Costa Rica has effectively leveraged these to ensure that nearly all of its electricity comes from renewable sources, reducing its carbon footprint and setting an inspiring example for the world. The success of renewable energy in Costa Rica is also seen in its high residential electrification rate, with 70% of households using electricity for cooking and heating their homes. This transition to cleaner energy reduces reliance on firewood, helps preserve forests, and improves public health by reducing indoor air pollution.
This commitment to renewable energy in Costa Rica has placed the country in a unique position within the global arena, especially as businesses and consumers become more environmentally conscious. International companies and investors are increasingly looking to operate in countries prioritizing sustainability. Costa Rica’s commitment to clean energy has made it an attractive destination for foreign direct investment. According to recent data, Costa Rica saw a 24% increase in foreign direct investment in 2023, and over 59 multinational companies have set up operations in the country between 2023 and 2024. The ability to attract such investments speaks volumes about Costa Rica’s ability to integrate sustainability into its economic framework while creating new job creation and development opportunities.
Economic Growth Driven by Sustainability
Costa Rica’s success is a remarkable example of how countries can decouple economic growth from carbon emissions. As the world increasingly embraces sustainability, industries prioritizing eco-friendly practices are reaping the benefits. This is evident in developing key export sectors such as coffee and cocoa in Costa Rica. In 2024, coffee exports grew by an impressive 16%, while cocoa exports increased by 20%. This surge can be attributed to the growing global demand for sustainable products as consumers become more conscious of their purchases’ environmental and social impacts. Furthermore, renewable energy in Costa Rica has benefited its economy and the regional energy market. Costa Rica exports surplus renewable energy to neighboring countries via the Central American Electrical Interconnection System (SIEPAC), strengthening the region’s energy security, promoting economic development, and environmental stewardship across borders.
Another key initiative strengthening Costa Rica’s position as a regional leader in green energy is the development of the Central American Electrical Corridor, which includes more than 50 charging stations for electric vehicles along major trade routes. This infrastructure is vital for adopting electric mobility, providing a sustainable transportation solution that aligns with Costa Rica’s commitment to reducing carbon emissions.
Innovation and Industrial Transformation
In addition to its success in renewable energy, Costa Rica has become a hotbed for green innovation and industrial transformation. Several cement plants in the country have begun implementing carbon capture technologies, which are helping reduce the carbon emissions typically associated with this industry. This initiative exemplifies how Costa Rica is leading in clean energy production and promoting innovation in carbon reduction across various sectors. The government has also been proactive in supporting the development of green technologies. The Costa Rican Foreign Trade Promoter (Procomer) has allocated $40 million to fund startups focusing on green hydrogen and optimizing electrical networks through artificial intelligence. These investments highlight the country’s commitment to fostering new technologies and industries crucial to achieving sustainability and addressing climate change. Green hydrogen, in particular, holds great promise as a clean energy source that can help decarbonize hard-to-abate sectors like transport and heavy industry.
The Path to a Fully Renewable Latin America
While Costa Rica’s accomplishments are impressive, the road to a fully renewable Latin America is still challenging. According to the RED 2024 report, the region needs to increase its renewable energy capacity by 3.5 times by 2040 to meet its climate goals. However, Costa Rica’s experience offers a model for other regional nations. The key to success lies in public-private partnerships, bioindustrial innovation, and a commitment to sustainable development across all sectors. Costa Rica’s promotion of ecotourism is another area where the country has found a perfect balance between economic growth and environmental stewardship. By leveraging its rich biodiversity and natural beauty, Costa Rica has become a world leader in ecotourism, attracting millions of tourists yearly and promoting conservation’s importance.
Sustainability as a Competitive Advantage
Costa Rica’s commitment to sustainability is not seen as a burden but as a competitive advantage. As Adriana Acosta, director of Esencial COSTA RICA, aptly says, “Sustainability is not a cost; it is our competitive advantage.” This perspective has shaped Costa Rica’s approach to development, and it is a sentiment echoed by the Minister of Environment, Franz Tattenbach, who emphasizes, “Each kilowatt exported strengthens democracy.” These statements reflect the belief that sustainability is not just an environmental issue but an integral part of national security, economic prosperity, and global influence.
Costa Rica’s leadership in renewable energy inspires the world, showing that it is possible to transition to a low-carbon economy while promoting social well-being and economic growth. The RED 2024 report concludes with a powerful message: “The future is renewable, or there is no future.” Costa Rica is proving that a sustainable future is achievable and beneficial for the environment, the economy, and society.
The Global Impact
The lessons Costa Rica has learned, and the innovations it has embraced do not just apply to Latin America. The country’s success story has reverberated around the globe, proving that sustainable development and economic growth can go hand in hand. As the world grapples with the urgent need to address climate change, Costa Rica is showing that the future of energy is renewable, and it is possible to create a thriving, green economy that benefits everyone.
Costa Rica’s leadership in renewable energy in Costa Rica and sustainable development is a powerful reminder that every country, regardless of size, can contribute to the global effort to protect the planet. Through innovation, commitment, and collaboration, Costa Rica is shaping a greener, more sustainable future for future generations.