Chile 95
At this point, and with the best information, simulations of possible scenarios of both different levels of carbon tax rates and electricity generation mixes
have been conducted by different projects like the Mitigation Action Plans and
Scenarios for Chile (MAPS Chile, 2014) where macroeconomic impacts are
observed with the interaction of electric generation models that represents the
expansion plans in the electricity sector and provide the resulting prices of technologies mixes for industry and households.
Using this context of Chile’s low- carbon emission pathway and the aggregate
information of macroeconomic and energy simulations, four scenarios were
developed where energy poverty could emerge as a consequential risk resulting
from the promotion of renewable energy by means of a carbon dioxide tax.
Four scenarios to understand energy poverty
To understand possible negative consequences – in this case energy poverty – of
continuing this pathway, scenarios help address uncertainties about the future
role of renewables in the Chilean energy sector. Across these scenarios any lowcarbon pathway needs to support a continuous growth rate appropriate for an
emerging country, where the rate of economic growth in capita terms is around
3.5% (Benavente, Gonzales, and Díaz, 2014). This pathway includes the objectives of an electricity generation matrix with a low presence of coal and other
fossil- fuel sources, plus the incorporation of renewable technologies like solar
and wind. At the same time, this pathway shall reduce negative externalities
produced by pollution from activities such as mining and manufacturing. Thus
in the near future Chile sees itself as a developed economy that bases its production on environmentally friendly technologies, generating opportunities for
them to be included in the electric generation mix of its population in
many ways.
The first scenario consists of moderate solar development. The main assumptions for this first exercise are moderate growing investment in solar projects
and, as a possible substitution, a moderate increase in liquefied natural gas
(LNG) prices. In addition, this scenario does not incorporate the development
of big hydroelectric projects in the south of the country.
The following three scenarios are modifications of part of the assumptions of
the first scenario, trying to identify the effect of a particular policy.
The second scenario considers a decrease in the cost of investment in solar
projects, with the rest of the scenario’s assumptions remaining as the baseline.
This assumption is consistent with evidence in the last report of renewable costs
by the International Renewable Energy Agency (IRENA). This report states
that the falling costs of solar and onshore wind are significant. Solar PV technology experienced learning rates of 18% to 22%, with solar panel prices falling by
around 80% since 2010. At the same time, onshore wind shows learning rates of
15%, with costs falling by around 38% since 2009. Taking into account that
Chile is a small and open economy, we assume that these prices will be reflected
in the local economy as in the global economy.
At this point, and with the best information, simulations of possible scenarios of both different levels of carbon tax rates and electricity generation mixes
have been conducted by different projects like the Mitigation Action Plans and
Scenarios for Chile (MAPS Chile, 2014) where macroeconomic impacts are
observed with the interaction of electric generation models that represents the
expansion plans in the electricity sector and provide the resulting prices of technologies mixes for industry and households.
Using this context of Chile’s low- carbon emission pathway and the aggregate
information of macroeconomic and energy simulations, four scenarios were
developed where energy poverty could emerge as a consequential risk resulting
from the promotion of renewable energy by means of a carbon dioxide tax.
Four scenarios to understand energy poverty
To understand possible negative consequences – in this case energy poverty – of
continuing this pathway, scenarios help address uncertainties about the future
role of renewables in the Chilean energy sector. Across these scenarios any lowcarbon pathway needs to support a continuous growth rate appropriate for an
emerging country, where the rate of economic growth in capita terms is around
3.5% (Benavente, Gonzales, and Díaz, 2014). This pathway includes the objectives of an electricity generation matrix with a low presence of coal and other
fossil- fuel sources, plus the incorporation of renewable technologies like solar
and wind. At the same time, this pathway shall reduce negative externalities
produced by pollution from activities such as mining and manufacturing. Thus
in the near future Chile sees itself as a developed economy that bases its production on environmentally friendly technologies, generating opportunities for
them to be included in the electric generation mix of its population in
many ways.
The first scenario consists of moderate solar development. The main assumptions for this first exercise are moderate growing investment in solar projects
and, as a possible substitution, a moderate increase in liquefied natural gas
(LNG) prices. In addition, this scenario does not incorporate the development
of big hydroelectric projects in the south of the country.
The following three scenarios are modifications of part of the assumptions of
the first scenario, trying to identify the effect of a particular policy.
The second scenario considers a decrease in the cost of investment in solar
projects, with the rest of the scenario’s assumptions remaining as the baseline.
This assumption is consistent with evidence in the last report of renewable costs
by the International Renewable Energy Agency (IRENA). This report states
that the falling costs of solar and onshore wind are significant. Solar PV technology experienced learning rates of 18% to 22%, with solar panel prices falling by
around 80% since 2010. At the same time, onshore wind shows learning rates of
15%, with costs falling by around 38% since 2009. Taking into account that
Chile is a small and open economy, we assume that these prices will be reflected
in the local economy as in the global economy.