6 Chile
Promoting renewable energy and the
risk of energy poverty in Chile
Luis E. Gonzales Carrasco and Rodrigo Cerda
1
Introduction
In the last six years, one of the most important global issues has been the challenge of climate change and its economic impacts. One of the main determinants of the acceleration of climate change is emissions of greenhouse gases
(GHG). According to the International Energy Agency (IEA, 2018), during the
three- year period 2014–2016, global emissions levelled off at around 32.1
million tons of CO 2 . Of this total, 42% came from electric generation, 23%
from transportation (mostly land transport at 17%), 19% from manufacturing
and construction, with the rest attributed to other sectors. This deceleration in
worldwide emissions growth is mainly due to the substitution of fossil fuels for
renewable energies.
Among the renewable energy technologies, solar energy has made one of the
biggest market impacts in recent years. In Latin America, for 2016, there is
installed solar capacity of 2828 MW, equivalent to 4% of the installed capacity
of the United States, 2% of China, and 1.5% of Europe. According to the International Renewable Energy Agency (IRENA, n.d.), Chile is leading the region
in its exploitation of solar potential, with 56.7% of Latin America’s installed
capacity during 2011–2016. Building on this positive trend, and due to the continued international pressure to mitigate the emissions of GHGs, a carbon tax
was implemented to complement the increase in clean energy with an incentive
to reduce emissions elsewhere. Nevertheless, this push towards substituting fossil
fuels with renewable energy also implies an expected rise in electricity prices in
the medium term. The extent depends on the electricity mix but may negatively
impact the cost of energy for households, disproportionally affecting the poor
because of their low income disposal to cover additional cost in their electric
bills after the implementation of the tax.
In particular, as an emerging economy Chile faces the challenge of continuing its development path while at the same time maintaining economic growth,
social welfare, and environmental action. Poverty in Chile has declined significantly since the early 1990s. This is measured in two ways: first, using the
traditional income measure, and second, by the new methodology of multidimensional poverty (Ministerio de Desarrollo Social, 2017). In traditional
Promoting renewable energy and the
risk of energy poverty in Chile
Luis E. Gonzales Carrasco and Rodrigo Cerda
1
Introduction
In the last six years, one of the most important global issues has been the challenge of climate change and its economic impacts. One of the main determinants of the acceleration of climate change is emissions of greenhouse gases
(GHG). According to the International Energy Agency (IEA, 2018), during the
three- year period 2014–2016, global emissions levelled off at around 32.1
million tons of CO 2 . Of this total, 42% came from electric generation, 23%
from transportation (mostly land transport at 17%), 19% from manufacturing
and construction, with the rest attributed to other sectors. This deceleration in
worldwide emissions growth is mainly due to the substitution of fossil fuels for
renewable energies.
Among the renewable energy technologies, solar energy has made one of the
biggest market impacts in recent years. In Latin America, for 2016, there is
installed solar capacity of 2828 MW, equivalent to 4% of the installed capacity
of the United States, 2% of China, and 1.5% of Europe. According to the International Renewable Energy Agency (IRENA, n.d.), Chile is leading the region
in its exploitation of solar potential, with 56.7% of Latin America’s installed
capacity during 2011–2016. Building on this positive trend, and due to the continued international pressure to mitigate the emissions of GHGs, a carbon tax
was implemented to complement the increase in clean energy with an incentive
to reduce emissions elsewhere. Nevertheless, this push towards substituting fossil
fuels with renewable energy also implies an expected rise in electricity prices in
the medium term. The extent depends on the electricity mix but may negatively
impact the cost of energy for households, disproportionally affecting the poor
because of their low income disposal to cover additional cost in their electric
bills after the implementation of the tax.
In particular, as an emerging economy Chile faces the challenge of continuing its development path while at the same time maintaining economic growth,
social welfare, and environmental action. Poverty in Chile has declined significantly since the early 1990s. This is measured in two ways: first, using the
traditional income measure, and second, by the new methodology of multidimensional poverty (Ministerio de Desarrollo Social, 2017). In traditional