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
Policies & action
Insufficient

We rate Chile’s climate policies and action as “Insufficient” in 2030 when compared to modelled domestic pathways. Chile’s policies and action in 2030 lead to stable, rather than falling, emissions and are not consistent with the Paris Agreement’s 1.5°C temperature limit. An “Insufficient” rating translates to a global temperature rise over 2°C and up to 3°C by end of the century.

We assess that with full implementation of its planned policies, Chile could meet or even overachieve its 2030 climate targets. 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.

According to our assessment, emissions under Chile’s currently implemented policies would reach levels between 101 and 118 MtCO2e excl. LULUCF by 2030 (8% below to 8% above 2020 levels). This is not sufficient to reach the 2030 NDC target and Chile will need to implement additional policies in order to reach this new target.

Our emission projections for planned policies, however, show that Chile could reach emissions levels of 80-92 MtCO2e excl. LULUCF by 2030 (16-27% below 2020 levels). With full implementation of its planned policies, including the shutdown of all coal power plants, the electromobility strategy and the energy efficiency law, Chile could overachieve its new unconditional NDC target of 95 MtCO2e by 2030.

Our current policy emissions pathway includes the Unconventional Renewable Energy Law (Law 20.257/2008), the carbon tax (Law 20.780/2014), the results of electricity supply tenders as of December 2017, emissions reductions from the retirement of the first 11 coal-fired power plants, the Electromobility Strategy, and the energy efficiency law (Law 21.305/2021). We have further included the impacts of COVID-19 on reducing greenhouse gas emissions in 2020 and 2021 by estimating the emissions intensity of the economy and adjusting it to the most recent GDP projections that take into account the effect of the pandemic (for more details, see Assumption section).

The main developments we have included in our latest assessment are the energy efficiency law and the updated coal phase-out plans. The energy efficiency law was officially published in 2021 and its potential emission savings of up to 28.6 MtCO2e are included in the current policy projections. In line with government plans (Gobierno de Chile, 2019; Ministerio de Energía, 2021f) we have also estimated the impact of the faster coal phase-out. Additionally, the impact of the full coal phase-out by 2040 was assessed under a planned policies scenario. The main difference between the current policy and the planned policy scenarios lies in the assumptions of the units to be phased out in 2025, the long-term share of renewable energy, the retirement of coal fired power plants, and the impacts of the electromobility strategy (for more details, see Assumption section).

We have also included government estimates for Chile’s net zero GHG target for 2050. Although significantly relying on forestry sinks, we estimate 2050 emissions would be consistent with the CAT rating category of 2°C Paris Agreement compatible for Chile.

Further, our analysis has shown that Chile has overachieved its 2020 pledge of 122 MtCO2e by over 10% with currently implemented policies (2020 emissions levels are estimated at 109 MtCO2e). Our analysis on current policies suggests that the upper boundary of the emission levels is likely to continue to slightly increase to up to 119 MtCO2e until 2028, which means that emissions will never rise to levels as high as the 2020 pledges.

Policy overview

Between 1990 and 2020, Chile’s emissions increased by 121% from 49 MtCO2e to 109 MtCO2e, excluding LULUCF. Looking at Chile’s current policies and in response to COVID-19, we estimate that emissions will remain stable in 2021 to between 107-113 MtCO2e per year, excluding LULUCF, which represents a 21-28% increase above 2010 levels.

A renewed increase in emissions due to COVID-19 recovery is not expected to happen as previously forecasted mainly because of the early phase-out of additional coal-fired power plants in 2021. We therefore project that emissions will remain relatively stable with a slight increase until 2023, when the effects of policies will begin taking effect, and emissions will drop continuously thereafter.

Our current policy emissions pathway includes the Unconventional Renewable Energy Law (Law 20.257/2008), the carbon tax (Law 20.780/2014), the energy efficiency law (Law 21.305/2021), the results of electricity supply tenders as of December 2017, emissions reductions from the retirement of the first eleven coal-fired power plants, the Electromobility Strategy, which sets out an action plan to achieve electrification of a 40% share of the private vehicle fleet—and 100% of public urban transport—by 2050 and the energy efficiency law.

With its already implemented policies, Chile has overachieved its 2020 pledge by more than 10%. However, our analysis suggests that Chile will need to implement additional policies to meet its unconditional and conditional NDC targets in 2030. If Chile goes ahead with the implementation of planned policies such the 2050 Energy Strategy, the complete coal phase-out and the electromobility strategy, it would be on track to overachieve its new NDC target for 2030.

Chile’s overarching Climate Action Plan 2017–2022 is the instrument articulating climate change policy for all sectors (Ministerio del Medio Ambiente de Chile, 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).

Chile is currently formulating a Climate Change Framework Law. The objective of this new law is to strengthen legal and institutional bases for implementing climate change mitigation and adaptation targets and move towards a low emissions economy. Public debates (“Diálogos Ciudadanos”) were held in several cities between November and January 2019. A preliminary draft bill was released for public consultation between June and July 2019 and participatory workshops were held. The idea of legislating the bill was approved by the senate in August 2020 and the senate is now voting on each indicator, a process that has been ongoing since November 2020. The draft bill, which was published in 2020, includes reference to the goal of GHG emissions neutrality by 2050 and financing measures and economic instruments including the creation of a National Finance Strategy Against Climate Change (President of Chile, 2020). If approved, this bill will enshrine Chile’s 2050 GHG emissions neutrality target into law.

Energy supply

Key ministerial documents:

The 2050 Energy Strategy published in 2017 sets a long-term vision for energy planning in Chile. It includes targets such as 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 zero-CO2 emissions by around 2050 (Climate Action Tracker, 2016).

Chile is already moving towards these goals as the renewable power share in the grid is now expected to reach 70% by 2030 as the solar and wind power sectors are maturing. In only six years (2014-2020), Chile has increased the generation capacity from these sources five-fold (Ministerio de Energía, 2020a). Making progress towards the non-conventional renewables goal, in 2020, 24.8% of electricity generation was from non-conventional renewable sources1 (NCRE), putting Chile well on track to reaching its 2013 goal of 25% of installed capacity of NCREs by 2025 (Ministerio del Medio Ambiente, 2021).

The Energy Route 2018–2022 (Ministerio de Energía, 2018b), provides a roadmap to meet the 2050 Energy Strategy’s targets 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.

Both the Energy Strategy and the Energy Route are currently under revision as new plans with significantly stronger targets are being elaborated. For the new National Energy Policy document (an update of the 2050 energy strategy also known as PEN), a participatory process for its update took place in 2018 and 2019. This was followed by a document from the advisory committee that sets out recommendations for the update of the National Energy Policy originally released in May 2021. It includes 14 key messages with sub-targets such as to supplying 75% of power through renewable sources by 2030 and at least 95% by 2050. If this is implemented in the next long term energy strategy, it would mark a significant step forward from the current targets (Ministerio de Energía, 2021a).

Similarly, a follow-up roadmap to the Energy Route 2018-2022 known as PELP (Planificación Energética de Largo Plazo) is under consultation for the years 2023-2027 and a preliminary document to allow for wider comments from the register of citizen participation was published in August 2021 (Ministerio de Energía, 2021g). It includes three modelled pathways, one based on current policies and assuming the NDC target for 2030 will be reached, and two more ambitious pathways aiming at GHG neutrality by 2050 and earlier.

Coal phase-out:

After more than a year of planning, in June 2019, Chile announced its plans to completely phase out coal by 2040 and aim for GHG neutrality by 2050 (Ministerio de Energía, 2019). However, around the same time, a new 375 MW coal-fired power plant in Mejillones (equivalent to about 1.8 TWh per year) started operations and two of Chile’s eight oldest coal power plants were closed (Electricidad, 2016; Engie, 2019; Tomás Gonzalez, 2019).

Since then, a shift in narrative has occurred and the coal phase-out has been progressing significantly faster than anticipated. The number of power plants to be shut by 2024 was increased to 11 in an updated plan released in 2020 (Ministerio de Energía, 2020c). These developments are already considered in our current and planned policy projections.

In July 2021 Energy Minister Juan Carlos Jobet made an announcement that, in addition to the eight power plants already successfully closed ahead of time in 2021, a total of 18 would be shut down or retrofitted by 2025, including the newly-opened Mejillones plant that will be retrofitted to operate as a natural gas plant. Other relatively new coal-fired power plants built in 2011 will continue operation using biomass as their fuel. This early closure and repurposing would lead to 65% of Chile’s coal-power plants being closed by 2025.

Nevertheless, Chile should be careful when repurposing its coal power plants, as natural gas should only play a minor role in Paris Agreement-compatible pathways (Climate Action Tracker, 2017) and the use of biomass is risky as Chile heavily relies on forests as carbon sinks for its net zero goal. (Ministerio de Energía, 2021f).

Although the energy minister announced that 18 plants would close by 2025, this has not been officially confirmed and it is unclear which plants are included. Based on several announcements by utilities and the ministry, however, it can be expected that an additional five coal-fired plants of a combined capacity of 1271 MW, representing an additional 22% of the total coal capacity in 2020 will be shut down by 2025.

The new phase-out plan is divided into two stages. First, between 2019 and 2024, Chile will close the original eight, some of the oldest coal-fired power plants, plus an additional three plants of medium age (built 1996 to 2012). Combined, they are equivalent to 1,731MW, corresponding to 31% of Chile’s coal electricity capacity in 2020 and to nearly 7.7 MtCO2e/year of annual emissions by 2024 if the demand is replaced by renewable energy sources (Ministerio de Energía, 2021b). If electricity demand is replaced by gas-fired generation, emissions reductions by 2024 would be 4.3 MtCO2e/year. Chile will phase out the remaining 17 plants, but has not yet specified a detailed schedule.

Phasing out all coal-fired power plants at the latest by 2032 would be an action compatible with the global sectoral benchmark for electricity sector under a scenario in line with the Paris Agreement for the Latin America region (Yanguas Parra et al., 2019): eight years ahead of Chile’s coal phase-out plan.

We have estimated that closing all coal-fired power plants in Chile by 2040 – assuming lineal retirement between 2025 and 2040 – could lead to a cumulative emissions reduction potential between 10 MtCO2e/year to 18 MtCO2e/year by 2030 depending on which technologies substitute electricity generation (for more details see Assumption section).

Energy efficiency law:

Another positive development was seen in February 2021 when the Energy Efficiency law (Ley de Eficiencia Energética, Law No. 21.305), which had previously been announced in the 2018–2022 Energy Route, was officially established as a legal framework for energy efficiency. The law aims to foster energy efficiency and covers the industry, mining, transport, and buildings sector, thereby reducing final energy consumption by 10% by 2030 and 35% by 2050. It will play a central role in reaching net zero emissions in 2050 and also in achieving mid-term targets. It claims to lead to a reduction of 28.6 MtCO2e by 2030 (Ministerio de Energía, 2021d). We have included this reduction in the current and planned policy projections: it plays a key role in keeping Chile’s emissions trajectory stable rather than increasing, as had been seen in previous assessments.

Other laws and policies

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, 2018a). 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. This policy is neither quantified in the current policy scenario nor the plan policy scenario due to lack of available data.

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).

Scenarios:

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, deducting estimations from policies coming after its publication. The main difference between these two scenarios lies in the assumptions of the long-term share of renewable energy and the coal phase-out.

In the current policy scenario, the renewable electricity share increases to reach around 59% by 2020 and then stalls. We consider only the first stage of the coal phase-out plan: closing of the first eleven plants by 2024. The planned policy scenario considers a growing renewable energy generation share towards 2050, where it reaches 70% and the assumption of linear retirement of coal power plants by 2040. 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-scale hydropower. The construction of large hydropower 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).

1| Chile defines non-conventional renewable energy sources as wind, solar PV, 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 (38% in 2019) and electricity (Comisión Nacional de Energía, 2021). Efforts are being made to make the mining sector – and copper sector in particular - more sustainable.

The Chilean Copper Commission (COCHILCO) has carried out surveys and compiled data on GHG emissions and energy consumption, the Green Mining Roundtable was launched in 2019, and the Chilean Economic Development Agency (CORFO) has supported the deployment of hydrogen vehicles for mining, which is also covered in the green hydrogen strategy (Ministerio de Energía, 2020a). The Ministry of Mining is also developing the National Mining Policy 2050, in which environmental policy is set to play a central role (Ministerio del Medio Ambiente, 2021).

Among the contents of the new Energy Efficiency law approved in early 2021 is the promotion of energy management in the country's large consumers. These include all large companies with consumption over 50 Tcal per year (210 TJ/yr), cumulatively accounting for more than one third of the country’s consumed energy. These so-called consumers with energy management capacity have to implement an energy management system and will additionally have to prepare an annual public report on several indicators including energy consumption and energy intensity (Ministerio de Energía, 2021d; Ministerio de Hacienda: Oficina de Partes, 2021)

Previously, an 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).

Transport

In 2019, the transport sector accounted for 37% of total final energy consumption in Chile, second to industry (Comisión Nacional de Energía, 2021). 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).

Chile’s Energy Route 2018-2022 also sets out a short-term goal of a 10-fold increase in EVs in 2022 (compared to 2017 levels) (Ministerio de Energía, 2021h). We estimate that the implementation of this strategy could lead to emission reductions between 1.1 to 4 MtCO2e/year by 2030. This is included in our current and planned policies scenario. The action plan is divided into strategic axes, which include development of policy and regulation, prioritising public transport, and supporting the initial uptake of electric mobility.

The market share of EVs remains low at only 0.08% of vehicles sold in 2020, and public charging infrastructure is limited, with only 350 units in 2020 (compared to e.g., 73000 in Germany). While at a low level, the sector is growing: EV sales increased 10-fold in five years, and the number of public charging stations doubled from 2019 to 2020 (IEA, 2021a). Chile is also already beginning to implement actions towards achieving the aforementioned targets. In 2020, for example, Chile registered 400 electric buses, doubling its stock to more than 800 and reaching the target set for 2020. This makes Chile the clear Latin American leader in terms of size of electric bus fleet (IEA, 2021a).The Chilean government also launched its first interurban electric bus, which operates the 85km route between Santiago and Rancagua and installed a 50 kW DC fast charger at the Turbus Terminal in Santiago for this purpose (Ministerio de Energía, 2021h).

The new Energy Efficiency law also targets the transport sector. It will establish energy efficiency standards for imported vehicles, and government subsidies are offered for electric taxis and home charging points. Furthermore, it aims to ensure interoperability of the EV charging system facilitates the access and connection to the charging network, and it gives powers to establish energy efficiency standards for vehicles (Ministerio de Energía, 2021c). The green hydrogen strategy, which was published in late 2020, also emphasises decarbonisation in the transport sector. Amongst other sectors (mining and agriculture), the transport sector is specifically targeted in the hydrogen plan, at first mainly for heavy and long-distance transportation, and later also to replace liquid fuels in land transportation (Ministerio de Energía, 2020a)

Chile’s electromobility target, and the first measures that have been taken, are a step in the right direction. It is especially great to see how the decarbonisation of the transport sector is also included in new strategies and laws such as the Energy Efficiency law and the Green Hydrogen Strategy. Nevertheless, additional policies, especially targeting private car ownership, are needed to meet global decarbonisation benchmarks, which 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). For the development of an integral policy making framework for transport, it is of great importance to consider social and economic consequences of the different policy options. The total emissions reduction potential of transport electrification depends significantly upon the decarbonisation of the electricity supply used to charge vehicles.

Buildings

Buildings consume 22%, almost a quarter, of the country's total energy and a significant part of this is used for heating (Comisión Nacional de Energía, 2021). It is therefore not surprising that the buildings sector is a central part of the new Energy Efficiency law. The law establishes that residential buildings, public buildings, commercial buildings and office buildings must have an energy rating to be commercialised: this is applicable to construction and real estate companies as well as housing and urban planning services. As with appliances such as refrigerators, the energy efficiency label allows people to have better information when renting or buying homes. The label must be included in all sales advertising by companies (Ministerio de Energía, 2021d).

Even prior to the Energy Efficiency law, Chile has been pursuing strategies for the buildings sector such as 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). A draft law currently debated in the Senate aims to promote an energy efficiency rating system for buildings – “Calificación Energética de Viviendas (CEV, in Spanish)”. This rating issued by the Ministry of Housing and Urbanism will be required for new residential buildings to be commercialised.

Land use & forestry
Sink

Although fluctuating strongly, on average Chile’s LULUCF sinks over the last 20 years were roughly 2/3 of other emissions. Chile should work toward maintaining this LULUCF sink.

The LULUCF sector has been a major sink in Chile, with GHG net emissions usually ranging from -48 to -78 MtCO2e from 1990 to 2020, with the exception of 2017. In 2018, CO2 removal from LULUCF accounted for 64 MtCO2, thus being able to compensate more than half to countries CO2 emissions (112 MtCO2).

Whereas the emission reductions from LULUCF sinks remained relatively stable until 2016, the value was reduced to -12 MtCO2e in 2017, which can directly be attributed to some of Chile’s worst wildfires in modern history that swept across the country in 2020 (Ministerio del Medio Ambiente, 2020). This shows how vulnerable these sinks are to extreme weather events, which are expected to increase in numbers. CO2e removal through LULUCF is also a central part of Chile’s strategy to become GHG neutral in 2050, it is therefore extremely important to assure that forests keep acting as sinks and do not turn into emission sources.

Chile’s 2020 NDC references the National Strategy for Climate Change and Vegetation Resources (ENCCRV), established since 2013 by the Ministry of Agriculture (MINAGRI), through the National Forest Corporation (CONAF), as one of the main tools in reaching the different targets on mitigation related to LULUCF, along with regulations and instruments granting incentives for forest owners to preserve or create new forests. Further, the NDC states that its afforestation target should be in line with Law Nº20.283 on Native Forest Recovery and Forest Promotion, under which afforestation is undertaken only in lands without vegetation and does not allow for substitution of native forests (Government of Chile, 2020a).

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