Chile

Overall rating
Insufficient
Policies & action
Insufficient
< 3°C World
Internationally supported target
Almost Sufficient
< 2°C World
Fair share target
Insufficient
< 3°C World
Climate finance
Not assessed
Net zero target

year

2050

Comprehensiveness rated as

Acceptable
Land use & forestry

historically considered a

Sink

Overview

Chile has made very substantial progress on climate action over the past year. Chile’s updated emissions projections under current policies and action level off, rather than increase, and the government's planned policies - if implemented - would peak emissions before 2025, overachieve the 2030 NDC targets and put Chile’s emissions on a declining trend slightly above the 1.5-degree compatible pathway range. This would be a remarkable achievement and set up the country as a frontrunner on climate action. CAT would rate the emissions levels under planned policies “Almost sufficient”.

In February 2021, Chile officially established the Energy Efficiency law as a legal framework, which will contribute to over 2% of emissions reductions per year until 2030, and it strengthened its coal phase-out plan, first announced in 2019. By 2024, 11 coal plants will be closed (up from 8 in the original plan), and by 2025, in total 18 plants could be closed or retrofitted to run with natural gas or biomass, accounting for 65% of Chile’s coal-power plants. Eight plants have already shut down, most ahead of schedule, driven by falling costs of renewables. This demonstrates a positive shift in narrative in the country, however switching to gas increases the risk of stranded assets and reliance on imports.

Chile will be the first Latin American country to present its long-term climate strategy (LTS) to the UNFCCC at COP26 in Glasgow. The document known as the ECLP was drafted in a participatory process with nearly 5000 people ranging from civil society to experts. The strategy will consist of over 400 concrete measures to reduce emissions, most prominently the supply of 80% of the energy mix from renewables in 2030 but it also includes goals and targets in other sectors such as reducing emissions from industry and mining by 70% by 2050. It will also - for the first time - include specific CO2 emission targets for each individual sector, breaking down the carbon budget announced in the NDC by sectors.

These targets will become legally binding in Chile’s forthcoming Framework Law that is currently under formulation. The law has the objective of strengthening legal and institutional bases for implementing climate change mitigation and adaptation targets and move towards a low emissions economy. The preliminary draft bill, if approved, will enshrine Chile’s 2050 GHG neutrality target into law.

Overall rating
Insufficient

Despite new laws and policies targeting reductions in CO2 emissions, the CAT continues to rate Chile’s climate targets and policies as “Insufficient”. The “Insufficient” rating indicates that Chile’s climate policies and commitments need improvements and announced policies need to be approved to be consistent with the Paris Agreement’s 1.5°C temperature limit.

Chile has submitted two climate targets for 2030: an unconditional target, which it plans to achieve with its own resources, and a more ambitious one, conditional to international support. We rate Chile’s 2030 conditional target (to be internationally supported) as “Almost sufficient” when compared to modelled domestic pathways. While this climate target represents a significant improvement over Chile’s previous one (from 2017), it is still not stringent enough to limit warming to 1.5°C and needs further improvements. Compared to its fair-share contribution to climate action, we rate Chile’s unconditional 2030 target even lower, as “Insufficient”. To achieve its 2030 climate targets, Chile needs to fully implement its planned policies, which go significantly beyond its current policies and action. With planned policies, Chile would meet both of its targets and would also create the opportunity for Chile to significantly improve its unconditional target, which could lead to a substantial improvement in its overall rating.

Policies & action
Insufficient

We rate Chile’s current climate policies and action as “Insufficient” in 2030 when compared to modelled domestic pathways however its planned policies would move it well within the “Almost sufficient” range to the edge of 1.5C compatible. Chile’s current policies and actions projected for 2030 are a major improvement and lead to relatively stable emissions, rather than increases. But to be consistent with the Paris Agreement’s 1.5°C temperature limit emissions need to peak and decline sooner, which we project they would do if the Chilean Government is successful in implementing its planned policies, which would attract of “Almost sufficient”. An “Insufficient” rating translates to a global temperature rise over 2°C and up to 3°C by the end of the century.

Since our last update in July 2020, Chile has passed a new energy efficiency law which aims at reducing emissions by 28.6 MtCO2e by 2030 across various sectors. The new Energy Efficiency law (Ley de Eficiencia Energética, Law No. 21.305) will foster energy efficiency across several sectors including industry, mining, transport, and buildings, thereby reducing final energy consumption by 10% by 2030 and 35% by 2050 (Ministerio de Energía, 2021d). While detailed implementation plans are still missing these are substantial emissions reductions and a positive development.

Furthermore, the coal-phase out has accelerated much faster than anticipated. Instead of closing 8 plants by 2024, 8 plants have already been closed and many more are to come. Plans have been announced to retrofit some newer coal power plants to operate with natural gas and biomass. However, gas is still a fossil fuel that needs to be phased out - so Chile should be careful when repurposing the plants otherwise it will be left with stranded assets. The use of biomass is also risky as Chile heavily relies on forests as carbon sinks for its net zero GHG target, not least when international studies show that new solar and wind projects are increasingly undercutting even the cheapest of existing coal-fired power plants. Replacing coal electricity with wind or solar could globally cut annual costs by a total of USD 32 billion (IRENA, 2021).

A preliminary draft Climate Framework bill was released for public consultation between June and July 2019 and the idea of legislating the bill was approved by the senate in August 2020. Currently, the senate is voting on each indicator, a process that has been ongoing since November 2020. The two main energy policy documents - the Energy Strategy and the Energy Route - are also under revision. A draft document of the updated energy strategy (PEN) recommends sub-targets such as to supplying 75% of power through renewable sources by 2030 and at least 95% by 2050. (Ministerio de Energía, 2021a). The preliminary document of the Energy Route 2023-2027 (PELP) - published in August 2021 - includes several modelled pathways based on different factors such as implementation of current policies, assuming the NDC target for 2030 will be reached, assuming GHG neutrality by 2050 and before (Ministerio de Energía, 2021g).

If Chile implements these new policies and laws, this would mark a significant step forward from all current targets and could further accelerate Chile’s transition.

Projected emissions for 2030 under current policies have decreased, but remain above the 2030 unconditional NDC target. If Chile goes ahead with implementing planned policies such as the 2050 Energy Strategy, the updated coal phase-out plan with additional shut downs in 2025 as announced by the government, the electromobility strategy, and the full energy efficiency law, it could overachieve both the unconditional and conditional NDC targets for 2030. With these policies, Chile could peak its emissions in 2023, which is two years earlier than the proposed peak year of 2025.

If we were to rate Chile’s planned policies, we would rate them “Almost sufficient”. However, it would still require additional measures to be in line with a 1.5°C Paris-compatible pathway when compared to modelled domestic pathways and even stronger measures when assessed against the fair share contribution.

Full policies and action analysis can be found here.

Internationally supported target
Almost Sufficient

We rate Chile’s 2030 internationally supported target – a reduction of up to 45% in net emissions by 2030, subject to international support– as “Almost sufficient” when compared with modelled domestic emissions pathways. The “Almost sufficient” rating indicates that Chile’s domestic target in 2030 is not yet consistent with the Paris Agreement’s 1.5°C temperature limit but could be, with moderate improvements. If all countries were to follow Chile’s approach, warming could be held below—but not well below—2°C. To improve its rating and be consistent with the 1.5°C temperature limit, Chile could increase the ambition of their conditional 2030 climate target equivalent to an absolute emissions limit of 69 MtCO2e excl. LULUCF in 2030 and, if necessary, outline the international support that it would need to achieve it.

While Chile does not explicitly ask for international finance, the NDC states that the 45% reductions target is conditional to specific conditions which are financial, markets, technological and political. On balance, however, the CAT methodology shows that provision of a small amount of international support is consistent with the wide range of literature on fair share contributions to meeting the Paris Agreement's goals. Our methods do not provide a clear answer regarding the need for climate finance for Chile.

Fair share target
Insufficient

We rate Chile’s 2030 unconditional reduction target – the absolute emissions target of 95 MtCO2e in 2030 - as “Insufficient” when compared to its fair-share contribution to climate action.

The “Insufficient” rating indicates that Chile’s fair share target in 2030 needs substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit. Chile’s target is at the least stringent end of what would be a fair share of global effort and is not consistent with the Paris Agreement’s 1.5°C limit unless other countries make much deeper reductions and comparably greater effort. If all countries were to follow Chile’s approach, warming would reach over 2°C and up to 3°C. Chile could attract a better rating by moving its unconditional reduction target to match its planned policies.

Land use & forestry
Sink

Although fluctuating strongly, Chile’s LULUCF sinks over the last 20 years absorbed, on average, roughly 2/3 of total emissions. Chile should work toward maintaining this LULUCF sink. For more information about forestry activities in Chile, please see the LULUCF tab under Policies and Actions.

Net zero target
Acceptable

We evaluate Chile’s net zero target as “Acceptable. Chile’s currently proposed net zero target for 2050 covers most key elements. Chile’s target covers all sectors and gases, communicates strategic goals and emissions targets per sector, and provides a detailed methodological framework. Notably, Chile underpins these sector-specific ambitions with detailed emissions pathway analyses.

Chile will heavily rely on negative emissions by forests to reach its net zero target, expecting carbon sinks to contribute as much as 50% of the emissions reduction required to reach the 2050 neutrality goal. It is therefore extremely important to assure that forests keep acting as sinks and do not turn into emission sources, a risk that can only partly be mitigated by policies as not only human activity but natural factors, and increasingly the effects of climate change via more extreme and frequent heat waves, drought, and wildfire, can turn removals from LULUCF to emissions. While Chile does not actively outline any plans to rely on reductions and removals outside its borders, future iterations of its NDC could explicitly rule out international credits to make this clearer.

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