In the Intended National Determined Contributions (INDC) published by Chile in 2015, Chile committed to reduce its CO2 emissions per GDP unit to 30% below the 2007 levels by 2030. In 2017, Chile ratified its commitments made under the Paris Agreement to the Conference of the Parties (COP). Chile has been a leader in establishing forward thinking carbon policy in Latin America. In 2014, Chile imposed a carbon tax of 5 USD per ton of CO2 emitted on generation facilities with a capacity of 50 MWth or more. The implementation of the carbon tax began in 2017.
The Chilean government and the Ministry of Energy have relied on other carbon policy instruments to advance in the decarbonization of the electricity system, amongst them establishing a working group to develop voluntary and binding agreements to retire coal generation facilities. On January 29th 2018, an agreement was signed between the Chilean government and the companies which own coal-fired power plants. The agreement signing process was facilitated by the Ministry of Energy and the Chilean Generator Industry Association. The agreement stated the following
- No new coal-fired projects were going to be developed unless they had carbon capture and storage technologies, or an equivalent.
- The Ministry of Energy would establish a working group with main stakeholders (private and public sector, NGOs, academia) to jointly evaluate the social, economic, environmental, health, employment and technical tradeoffs associated with the definition of a decarbonization plan for the electricity system.
Recently, the Chilean government announced more aggressive decarbonization goals by presenting its intention to reach carbon neutrality by 2050. Existing coal generation facilities will have to be either converted or retired in order to fully decarbonize the electricity system. On June 2019, generation companies signed agreements with the government to retire 8 units (1047 MW) within the next 5 years. As part of the decarbonization commitments, the Ministry of Energy and the generation companies must review the decarbonization plan every 5 years. Chile has other carbon policy initiatives in development, an energy efficiency and a climate change law are being developed and discussed to further advance decarbonization efforts.