94 Luis E. Gonzales Carrasco and Rodrigo Cerda
Recently, the government invited tenders to provide 12.430 GWh per year,
starting in 2021, in the SIC and SING systems. This call constituted an
important step forward in the implementation of the energy agenda. A total of
84 companies participated in the tender process and the electricity supply was
awarded to companies that offered to sell electric power to the market at
US$47.6 per MWh. This price is much lower than those currently set in the
market. Importantly, two- thirds of the investment will be in solar and wind generation (Ministerio de Energía de Chile, 2016).
In addition to the Chilean economic efforts carried out in the last 40 years,
the country has been engaged in efforts to mitigate the negative effects of
climate change. One of the important efforts was the approval of a law to
provide incentives promoting non- conventional energy sources (NCES). The
law states that by 2025, 20% of total energy would correspond to NCES (Ley
No 20257, 2008).
The current public policy agenda on energy stipulates that 45% of the
increase in electricity supply in the 2014 to 2025 period should come from
NCES. Chile is also including new policy instruments to mitigate GHG emissions. In the 2014 tax reform, the government introduced a tax on CO 2 emissions and local air pollutants (SO x , NO x , and particulate matter) from fixed
specific sources. The tax on CO 2 emissions was set at US$5 per ton. In addition,
a car tax was imposed based on NO x car emissions. Nevertheless, an expected
correction to this tax is required.
According to the International Energy Agency (IEA, 2018), in 2012 the
average global CO 2 emissions per capita were 4.5 tons per year, with Chile having
a similar figure. Those numbers are much lower than the Organisation for Economic Co- operation and Development (OECD) average of 97.2 tons per person.
In the Latin America region, Chile accounted for 4.7% of total emissions.
Chile, as a member of the UN’s Framework Convention on Climate Change
(UNFCCC), has committed to reducing GHG emissions by 30% by 2030
(Gobierno de Chile, 2015). The mitigation efforts should occur in different
sectors that produce GHGs, focusing on: energy, industry, mining, and other
sectors using fossil fuels; processes in the industrial sector; use of land; and waste.
To achieve the reduction in GHGs by 2030, Chile committed to reducing its
GHGs emissions by 35% to 45% vis- à-vis its 2007 levels, provided it is possible
to keep the pace of economic growth and obtain international grants to finance
the additional required measures to attain the objective. In the land management sector, Chile committed to the restoration of 100,000 hectares of forestry,
which corresponds to the reduction of 600,000 tons of GHG emissions per year.
To tackle this challenge of a low- carbon pathway, policy measures have been
taken and implemented. One of the most representative for the market was the
carbon pricing signal. After a broader discussion in academia, congress, and civil
society, Chile decided to implement a carbon dioxide tax starting at $5/ton of
carbon dioxide equivalent as its carbon pricing strategy. This measure was
approved in 2014 and implemented recently in 2017, collecting its revenues at
the moment less than quinquennia.
Recently, the government invited tenders to provide 12.430 GWh per year,
starting in 2021, in the SIC and SING systems. This call constituted an
important step forward in the implementation of the energy agenda. A total of
84 companies participated in the tender process and the electricity supply was
awarded to companies that offered to sell electric power to the market at
US$47.6 per MWh. This price is much lower than those currently set in the
market. Importantly, two- thirds of the investment will be in solar and wind generation (Ministerio de Energía de Chile, 2016).
In addition to the Chilean economic efforts carried out in the last 40 years,
the country has been engaged in efforts to mitigate the negative effects of
climate change. One of the important efforts was the approval of a law to
provide incentives promoting non- conventional energy sources (NCES). The
law states that by 2025, 20% of total energy would correspond to NCES (Ley
No 20257, 2008).
The current public policy agenda on energy stipulates that 45% of the
increase in electricity supply in the 2014 to 2025 period should come from
NCES. Chile is also including new policy instruments to mitigate GHG emissions. In the 2014 tax reform, the government introduced a tax on CO 2 emissions and local air pollutants (SO x , NO x , and particulate matter) from fixed
specific sources. The tax on CO 2 emissions was set at US$5 per ton. In addition,
a car tax was imposed based on NO x car emissions. Nevertheless, an expected
correction to this tax is required.
According to the International Energy Agency (IEA, 2018), in 2012 the
average global CO 2 emissions per capita were 4.5 tons per year, with Chile having
a similar figure. Those numbers are much lower than the Organisation for Economic Co- operation and Development (OECD) average of 97.2 tons per person.
In the Latin America region, Chile accounted for 4.7% of total emissions.
Chile, as a member of the UN’s Framework Convention on Climate Change
(UNFCCC), has committed to reducing GHG emissions by 30% by 2030
(Gobierno de Chile, 2015). The mitigation efforts should occur in different
sectors that produce GHGs, focusing on: energy, industry, mining, and other
sectors using fossil fuels; processes in the industrial sector; use of land; and waste.
To achieve the reduction in GHGs by 2030, Chile committed to reducing its
GHGs emissions by 35% to 45% vis- à-vis its 2007 levels, provided it is possible
to keep the pace of economic growth and obtain international grants to finance
the additional required measures to attain the objective. In the land management sector, Chile committed to the restoration of 100,000 hectares of forestry,
which corresponds to the reduction of 600,000 tons of GHG emissions per year.
To tackle this challenge of a low- carbon pathway, policy measures have been
taken and implemented. One of the most representative for the market was the
carbon pricing signal. After a broader discussion in academia, congress, and civil
society, Chile decided to implement a carbon dioxide tax starting at $5/ton of
carbon dioxide equivalent as its carbon pricing strategy. This measure was
approved in 2014 and implemented recently in 2017, collecting its revenues at
the moment less than quinquennia.