Chile has updated and submitted its 2020 Nationally Determined Contribution which is more ambitious than its predecessor. The new goal is to go from 111 million tons / CO2eq emitted in 2016 to 95 million tons / CO2 in 2030.
Chile’s emissions profile can be seen here:
Chile’s total emissions account for less than 0.3% of total global emissions. However, domestic GHG emissions have increased more than 110% during the last 26 years from 52.0 Gt CO2eq in 1990 to 111.6 Gt CO2eq in 2016 (BUR, 2018). Also, in per capita terms, emissions have increased from 2.5 to 4.7 tons between 1990 and 2013.
Chile is highly vulnerable to the effects of climate change, since it presents seven of the nine characteristics established by Article 4 of the United Nations Framework Convention on Climate Change (UNFCCC, 2001). Also, according to the Risk Index Global Climate (IRCG), Chile is the tenth country most affected by climate change, with losses valued around USD (PPP) 2.6 billion (Kreft et al., 2017) and potential economic losses greater than 1% of Annual GDP, by the end of this century (ECLAC, 2012).
Chile has announced decarbonization of its energy matrix by 2040 and carbon neutrality by 2050. Currently is also discussing a Climate Change Law bill.
The Minister of Finance of Chile, Ignacio Briones, is the co-chair of the Coalition of Finance Ministers for Climate Change, which promotes national climate action, especially through fiscal policy and the use of public finance
- Currently, 69% of the energy matrix is produced by the use of fossil fuels (MdE, 2018).
- Energy sector is the biggest contributor to GHG emissions accounting for 78% of total national emissions.
- Electricity generation is the major contributor in energy sector (41.5% of total Energy sector).
- A significant fraction of the power generation is provided by 28 thermoelectric plants (40%), their GHG emissions represent 26% of the national total.
In September 2014, Chile passed a green tax law and went into force in 2017. Three new taxes were introduced:
- A tax on CO2 emissions from stationary sources with boilers and turbines.
- A tax on local contaminants also on stationary sources with boilers and turbines (PM, SO2 and NOx), and
- A tax on the first sale of new cars considering the expected NOx emissions over their lifetime.
The carbon tax is fixed at USD 5 per ton of CO2 emissions (Estimated by the Ministry of Social Development in 2014). Today the shadow price of carbon is estimated at USD 32.5 per ton of CO2.
The tax is levied on ‘sources’ with boilers and turbines that produce a heat power of 50 megawatts considering the sum of the combined facilities´ heat output.
In January 2020 a new tax reform was approved, including two major changes to the green taxes:
- Changing the threshold: regulated installations that yearly emit either 25,000 ton of CO2 or 100 ton of PM.
- Creates a complementary offsets scheme for carbon and local pollutants.
Chile is a signatory to the Declaration on Carbon Pricing in the Americas and the Cali Declaration (of the Pacific Alliance) https://alianzapacifico.net/en/declaracion-de-cali/
Chile is also part of different platforms:
- It is co-chair of the Carbon Pricing in the Americas (CPA)
- Carbon Pricing Leadership Coalition (CPLC)
- Partnership for Market Readiness (PMR)
- The Pacific Alliance which include:
- Technical Group of Green Growth and Environment
- Technical Subgroup on MRV