Chile

Critically Insufficient4°C+ World

NDCs with this rating fall well outside of a country’s “fair share” range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would exceed 4°C. For sectors, the rating indicates that the target is consistent with warming of greater than 4°C if all other sectors were to follow the same approach.

Highly insufficient< 4°C World

NDCs with this rating fall outside of a country’s “fair share” range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would reach between 3°C and 4°C. For sectors, the rating indicates that the target is consistent with warming between 3°C and 4°C if all other sectors were to follow the same approach.

Insufficient< 3°C World

NDCs with this rating are in the least stringent part of a country’s “fair share” range and not consistent with holding warming below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government NDCs were in this range, warming would reach over 2°C and up to 3°C. For sectors, the rating indicates that the target is consistent with warming over 2°C and up to 3°C if all other sectors were to follow the same approach.

2°C Compatible< 2°C World

NDCs with this rating are consistent with the 2009 Copenhagen 2°C goal and therefore fall within a country’s “fair share” range, but are not fully consistent with the Paris Agreement long term temperature goal. If all government NDCs were in this range, warming could be held below, but not well below, 2°C and still be too high to be consistent with the Paris Agreement 1.5°C limit. For sectors, the rating indicates that the target is consistent with holding warming below, but not well below, 2°C if all other sectors were to follow the same approach.

1.5°C Paris Agreement Compatible< 1.5°C World

This rating indicates that a government’s NDCs in the most stringent part of its “fair share” range: it is consistent with the Paris Agreement’s 1.5°C limit. For sectors, the rating indicates that the target is consistent with the Paris Agreement’s 1.5°C limit.

Role model<< 1.5°C World

This rating indicates that a government’s NDC is more ambitious than what is considered a “fair” contribution: it is more than consistent with the Paris Agreement’s 1.5°C limit. No “role model” rating has been developed for the sectors.

1.5°C Compatible< 1.5°C World

Economy-wide

Between 1990 and 2013, Chile’s emissions increased by 110% from 53 MtCO2e to 112 MtCO2e, excluding LULUCF. Taking into account Chile’s current policies, we estimate that emissions will slightly decrease and level out to reach 120 MtCO2e per year in 2020 excluding LULUCF, which represents a 127% increase above 1990 levels, and 29% increase above 2010 levels. Thereafter, we project that emissions will ramp up, climbing to 144 MtCO2e in 2030 (171% above 1990 levels and 54% above 2010 levels) excluding LULUCF. Under currently implemented policies, Chile will not meet its NDC targets. According to our analysis, Chile could achieve its NDC unconditional target and come close to achieving its conditional NDC if it implements planned policies from its 2050 Energy Strategy.

Chile’s overarching Climate Action Plan 2017–2022 is the instrument articulating climate change policy for all sectors (Ministerio de Medio Ambiente, 2017). It guides climate mitigation actions and intends to advance mitigation measures by maintaining the national GHG inventory, developing policy, implementing MRV systems, and fulfilling Chile’s international commitments (Government of Chile, 2016a).

Energy supply

In early 2018, Chile’s Ministry of Energy agreed with major utilities to cease the construction of new coal power plants that do not incorporate CCS technologies (Ministerio de Energía, 2018a). This agreement also included an aim to phase out coal that is aligned to the 2050 Energy Strategy. While the details for the phase-out have yet to be specified, it is clear that this will mean a substantial deviation from today’s situation: in 2016 coal had a 41% share of electricity generation (IEA, 2017). According to CAT analysis, halting the construction of new coal power plants is one of the ten most important short-term steps needed to limit warming to 1.5°C (Climate Action Tracker, 2016). Chile’s decision also follows on the renewable energy cost reduction trend seen over recent years in Chile (IRENA, 2015, 2018). Cost reductions, rather than policy implementation, have led to higher implementation of renewable energy in Chile in recent years. The cost of renewable energy technologies in Chile is expected to keep declining (Ministerio de Energía, 2017c). Currently, there are 15 coal-fired power plants, an installed capacity of 5.1 GW, in operation in Chile. A unit for the Mejillones plant, equivalent to 0.4 GW or 7% of total installed capacity, is under construction (Global Coal Plant Tracker, 2018).

Chile’s Climate Action Plan 2017–2022, includes mitigation actions in the energy sector (Ministerio de Medio Ambiente, 2017). These actions are guided by the goals set in Chile’s Energy Agenda and Chile’s National Energy Policy (also referred to as 2050 Energy Strategy). The 2050 Energy Strategy has set long-term targets for renewable energy generation. These targets include 60% electricity production from renewable energy by 2035 and 70% by 2050 (Ministerio de Energía, 2015). To achieve the Paris Agreement’s long-term temperature goal, the global power sector needs to rapidly transition to being carbon-free by around 2050 (Climate Action Tracker, 2017).

Chile’s most recent energy planning documents, the Mitigation Plan for the Energy Sector (referred to as Mitigation Plan) and the Energy Sector’s Long Term Strategy, already assume a decreasing share of coal electricity generation towards 2050 (Ministerio de Energía, 2017b, 2017c). Chile’s Mitigation Plan includes three different scenarios for the energy sector: current policies, 2050 Energy Strategy and additional effort. We have assessed the first two in our analysis as current and planned policies respectively. The main difference between these two scenarios lies in the assumptions of the long-term share of renewable energy. The current policy scenario, the renewable electricity share increases towards 2020 to reach around 59% and then stalls; the planned policy scenario considers a growing renewable energy generation share towards 2050, where it reaches 70%. This difference is translated to higher GHG emissions in the current policy scenario, as electricity generation from gas is ramped up to satisfy growing demand. In a Paris Agreement-compatible pathway, however, (unabated) gas should play only a minor role in electricity generation and phase out completely by 2050 (Climate Action Tracker, 2017).

Both the current policy and 2050 Energy Strategy scenarios from the Mitigation Plan include substantial generation from hydro — which accounted for 25% of generation in 2016 (IEA, 2017), and is assumed to increase to 32% and 39% respectively in 2030. According to the 2050 Energy Strategy scenario from the Mitigation Plan, renewable energy generation goals in 2035 and 2050 are only to be met with a substantial contribution of hydro power generation. It is not clear how much of this share is large hydro. The construction of large hydro projects in Chile is highly controversial, largely because of significant adverse environmental and social impacts. In 2014, Chile’s government overturned environmental permits for HidroAysén, a massive hydroelectric project in Patagonia, after a seven year campaign against it - the largest environmental campaign in Chile’s history (NRDC, 2016).

Making progress towards the non-conventional renewables goal, in 2016, 11% of generation was from non-conventional renewable sources, and 52% of the generation capacity under construction was non-conventional renewable energy² (NCRE) (Comisión Nacional de Energía and Ministerio de Energía, 2017). As a measure to foster decentralised renewable energy deployment, in early 2018, Chile reformed its Distributed Generation Law (also referred to as the “Net Billing” Law) (Law 20.571). The reform included a tripling of installed capacity threshold from 100 kW to 300 kW, which aims to support and promote larger projects of self-consumption of electricity (Ministerio de Energía, 2018b). As in the original law, electricity surplus can be fed into the grid to obtain discounts in the owner’s electricity bill. The reform establishes, that if an owner has more than one establishment, these discounts are also applicable for those electricity bills, otherwise, discounts from surplus can be accumulated.

Additionally, Chile has implemented a carbon tax of 5 USD/tCO2 for stationary sources (turbines or boilers above 50 MWth), which came into effect in 2017. Payments for 2017 began in April 2018 and accounted for more than 190 million USD (El Mercurio, 2018).

From 2010 to 2013, the government implemented several policies on appliance labelling, energy efficiency, fuel efficiency standards and electricity infrastructure. Policies that stand out are the Energy Efficiency Seal (2013), which provides recognition form the Chilean Ministry of Energy to companies demonstrating a high commitment in terms of energy efficiency—in 2017, 22 companies received this recognition for more than 590 GWh per year saved through energy efficiency projects (Revista Electricidad, 2018)—and Energy Efficiency Action Plan 2012–2020 (Ministerio de Energía, 2013), which aims to set a suitable legal framework for energy efficiency implementation across different sectors towards a 15% energy efficiency improvement by 2025. The Energy Efficiency Action Plan is part of the government’s Energy Agenda.

A newly published roadmap, the Energy Route 2018–2022 (Ministerio de Energía, 2018c), supports the targets in the 2050 Energy Strategy and establishes commitments for further emissions reductions. These commitments include quadrupling small distributed renewable energy capacity by 2022, establishing a legal framework for energy efficiency in the industry, mining, transport, and buildings sector, implementing a ten-fold increase of current EVs share, regulating solid biofuels (i.e. wood), starting the process of decarbonising the energy matrix and establishing a concrete phase-out plan for coal-fired power plants. To be compatible with the Paris Agreement temperature goal, countries will have to implement early retirement of unabated coal power plants and phase them out at the latest in 2050 (Climate Analytics, 2016).

2 | Chile defines non-conventional renewable energy sources as wind, solar, geothermal, biomass, tidal, and hydro up to 20MW.

Industry

Chile is the world’s leading copper exporter, and the mining and industry sector is Chile’s largest consumer of both total final energy (39% in 2015) and electricity (Comisión Nacional de Energía and Ministerio de Energía, 2017).

The main agreement between the government and the mining industry regarding energy efficiency is the “Cooperation Agreement”, under which mining companies should look for ways to use energy more efficiently, and the Ministry of Energy should support them (Government of Chile, 2016b).

Chile is considering an energy efficiency law targeting “energy intensive” industries (i.e. with energy consumption higher than 418 TJ per year) that would possibly be legally binding, but so far, any mitigation action in the mining and industry sector has been driven by private enterprises (Government of Chile, 2016b). Additional policies within this sector would be important for Chile to reduce its emissions (Ministerio de Energía, 2017b).

Under current policies, energy emissions from the mining and industry sector are projected to reach 21.4 MtCO2e per year in 2030, 24% increase compared to emissions from 2015, while under planned policies (2050 Energy Strategy), the projected emissions are 18.9 MtCO2e per year in 2030 (Ministerio de Energía, 2017b).

Transport

In 2015, the transport sector accounted for 35% of total final energy consumption in Chile, second to industry (Comisión Nacional de Energía and Ministerio de Energía, 2017). In the same year, the government introduced the “Green Tax” on motorised vehicles, which applies to new vehicles, and is intended to incentivise more efficient vehicles. Payments of this tax for 2017 accounted for 107 million USD (El Mercurio, 2018). Chile also has a vehicle labelling programme (Government of Chile, 2016a) and has set CO2 fleet performance standards—that are in line with those of the US, EU and Japan—for new imported vehicles (Ministerio de Energía, 2017b).

In December 2017, Chile published its electromobility strategy, which sets out a goal and action plan towards achieving a 40% share of electric passenger vehicles as well as a 100% electrified public transport by 2050 (Ministerio de Energía, 2017a). The action plan is divided into strategic axes, which include development of policy and regulation, prioritising pubic transport, and supporting the initial uptake of electric mobility. Chile has already begun implementing actions towards achieving these targets. End of April 2018, the Chilean government funded 60 electric taxis, which are planned to start operating in Santiago in August 2018 (Ministerio de Transportes y Telecomunicaciones, 2018). The government is also coordinating the addition of 200 electric buses—or about 3% of the fleet—to the 6,600 buses in the Transantiago public transport system by the end of 2018 (Nuñez, 2017; Diario Financiero, 2018). These buses are planned to be incorporated in a 10 km long electric corridor in Chile’s capital city (La Tercera, 2018). Chile’s electromobility target is a step in the right direction, but global benchmarks foresee having only zero emission cars on the road by 2050 to be compatible with limiting temperature to 1.5°C (Climate Action Tracker, 2016). Our analysis does not include estimations on emissions reductions from the electromobility strategy due to lack of available data.

Under current policies, energy emissions from the transport sector are projected to reach 33.4 MtCO2e per year in 2030, equivalent to a 43% increase from 2015, while under planned policies emissions are projected to be 28.3 MtCO2e per year by 2030 (Ministerio de Energía, 2017b).

Buildings

The buildings sector was the third largest consumer of final energy in 2015, accounting for 21% of consumption (Comisión Nacional de Energía and Ministerio de Energía, 2017). Chile pursues a National Strategy for Sustainable Buildings, which includes energy, water, waste and health goals. The government also incentivises energy efficiency in public buildings (Government of Chile, 2016a). Under the law no. 20.571/2016, Chile aims to incentivise the use of solar heating through tax cuts for developers who implement this technology (Ministerio de Energía, 2017b).

Energy emissions from the buildings sector are projected to reach 9.5 MtCO2e per year in 2030 under current policies, a 61% increase compared to emissions in 2015, which will be mainly driven by increased energy demand for residential heating (Ministerio de Energía, 2017b). Under planned policies scenario emissions are projected to be 8.4 MtCO2e.

Forestry

The LULUCF sector has been a sink of around 30–45 MtCO2e in the period from 1990 to 2013. This sink was equal to 36% of Chile’s emissions in 2013. Chile’s NDC references two planned policies, which were not yet in place as of August 2018: updates to the Native Forest Law and a new Forest Promotion Law. These laws would reduce emissions from the forestry sector by reducing deforestation and increasing the sink through forest management, conservation, reforestation, and afforestation (Government of Chile, 2016a).