Costa Rica

We rate Costa Rica’s policies and actions as “1.5°C compatible” when compared to its fair share. The “1.5°C compatible” rating indicates that Costa Rica’s climate policies and action are consistent with limiting warming to 1.5°C. Costa Rica’s climate policies and action do not require other countries to make comparably deeper reductions.

Costa Rica has made strides in implementing its National Decarbonisation Plan, but some key policies and projects have yet to be realised, especially those related to electric transportation and modal shift. On the other hand, Costa Rica’s efforts have been evident in the significant uptake of EVs, which made up 12% of vehicle sales in 2023.

Most of Costa Rica’s electricity comes from renewable sources, but in the past year a notable share of thermal energy (from burning fossil fuels) has been used to compensate for reduced hydropower production due to drought. Efforts to enshrine the fossil fuel moratorium into law have also faced challenges during the legislative process. Costa Rica should focus on expanding and diversifying its renewable energy sources instead of increasing its dependence on fossil fuels.

If Costa Rica wants to maintain its 1.5°C compatibility, it should ensure that that the measures under the National Decarbonisation Plan continue to be implemented and avoid increased fossil fuel use through abandoning the moratorium.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

With currently implemented policies, Costa Rica’s emission levels could reach between 13.2 and 15.8 MtCO₂e/year in 2030. This represents an increase between 2% below and 18% above 2010 levels (excl. LULUCF). Costa Rica’s emissions up to 2021 have continued to increase and reached 15.8 MtCO₂e, contrary to the government’s expectations for the period. The lower range of Costa Rica’s current policy projections almost reaches the upper range of its NDC target, but Costa Rica needs to improve the implementation of key mitigation policies in the transport, agriculture, and waste sectors to be on track with this trajectory.

While the implementation of some climate policies has been successful, like the biofuel mandate being introduced next year and a rapidly rising EV market share, other policies have yet to be passed or are under scrutiny, especially in the transport sector. Costa Rica’s electrified rail projects have stalled and have scaled back their efforts to fully electrify, and modal shift has also been slow. Efforts to enshrine the fossil fuel moratorium into law have also faced challenges from the current administration.

Costa Rica’s most important climate policy is its National Decarbonisation Plan (NDP) (Government of Costa Rica, 2019c), which sets out decarbonisation policies and actions across all relevant sectors of the economy. Costa Rica has regularly published updates on its NDP, and the latest update report estimates that 83% of the goals of the first implementation phase (2019–2022) will be met (Dirección de Cambio Climático, 2022). However, no update has been published since this 2022 report, which evaluated progress up to 2021. Some of the most significant goals of the first implementation phase that were considered ‘at risk’, such as the electrified rail projects, are still under scrutiny by the current government.

Costa Rica has several sectoral-level policies to reduce GHG emissions. The transport sector is expected to deliver most of the planned emissions reductions outlined in national documents.. Law 9518 on incentives and promotion of transport electrification will play a key role in meeting Costa Rica’s NDC and net zero targets. Agriculture is another important pillar of Costa Rica’s mitigation plans, where NAMAs for livestock, coffee, and other key commodities have been initiated. The LULUCF sink is expected to double by 2050 to meet the emissions trajectory outlined in the NDP, relying on programmes such as Payments for Ecosystem Services under REDD+ and the national voluntary carbon market initiative.

Costa Rica’s National Programme for Carbon Neutrality—first implemented in 2012—is a cross-sectoral government initiative that established a voluntary domestic carbon market, in which businesses and organisations can purchase emissions offsets in pursuit of carbon neutrality, but only after they have done everything possible to reduce their own emissions. The programme also establishes a “C-Neutral” (carbon neutral) certification for businesses (Ministerio de Ambiente y Energía, 2015a). Over the years, the programme has expanded its certification categories. In 2021, the programme was further expanded to allow certifications for products, events and educative centres (Dirección de Cambio Climático, 2021a).

In 2019, Costa Rica reformed its Executive Decree No. 41578. With this reform, it extended the national moratorium on oil exploration and exploitation from September 2021 until the end of 2050 (Government of Costa Rica, 2019f). Beyond existing policies, there have been significant attempts by legislators to enshrine the oil moratorium into law, and the bill is currently up for debate in the Plenary. However, the current administration has consistently voiced its opposition to the bill, citing the potential economic value of exploiting Costa Rica’s fossil fuel reserves, and has even proposed building a refinery. Rather than fossil fuel production, Costa Rica should focus on further increasing its renewable energy capacity and avoid any technology lock-in and stranded assets.

Renewable energy has made up almost all of Costa Rica’s electricity mix since 2015. However, recent drought conditions affecting hydropower have resulted in increased fossil fuel burning for thermal energy generation. In April 2024, this has reached up to a quarter of Costa Rica’s total electricity production. While this has decreased again to less than 10% as of July 2024, it is still significantly higher than during the period 2015 to 2022 (DOCSE, 2024b). Costa Rica should diversify its renewable energy sources to avoid overreliance on hydropower and to maintain its position as a global climate leader.

Costa Rica’s electricity mix has been more than 98% renewable since 2015 (Camarillo, 2022). In 2021, the country managed a full-year renewable generation rate of 99.98% (EFE, 2021). However, the share of fossil electricity production has dramatically increased in recent months. In 2023, electricity production from renewables dropped to 95% in 2023, and only 91% of electricity demand was met using renewable sources in the same period (DOCSE, 2024a). This is primarily attributed to drought conditions affecting hydropower production, which makes up about two-thirds of Costa Rica’s renewable generation (Webb, 2024).

The drought conditions affecting hydropower generation have further increased in 2024. Since the beginning of January, thermal energy has accounted for 10% of electricity produced and reached as high as 25% in April and May of this year, although it has since rebounded to under 10% (DOCSE, 2024b). Costa Rica has heavily relied on hydropower for electricity production, while the expansion of other renewable energy sources, except wind power, has been low (Ember, 2024). Costa Rica is already taking steps to diversify its electricity mix, such as the significant wind and solar capacity additions outlined in the Generation Expansion Plan 2022-2040 (Grupo ICE, 2023).

The overarching strategy driving climate policy in the power sector is the VII National Energy Plan 2015-2030, which supports the continuation of renewable energy development, improving energy efficiency, diversifying and decentralising energy generation, and the electrification of fossil fuel-reliant sectors. The aspirational goal of the plan was to achieve and sustain 100% of electricity generation coming from renewable energy by 2021 (Ministerio de Ambiente y Energía, 2015c). While this target was technically achieved, it has not been sustained.

To improve the reliability, sustainability, and efficiency of its electricity grid, Costa Rica has also put forward its National Strategy for Smart Grids 2021-2031. The country is currently on track to achieve its target of installing 1 million smart meters (or 60% of households) by 2026 (MINAE, 2021; OECD, 2023).

Fossil gas and oil

Costa Rica has not explored or exploited its fossil fuel resources, sustained by its national moratorium via executive order. Some members of the legislature are aiming to enshrine it into law, but this motion is opposed by the current president Chaves and his administration. A law on transition fuels is also making its way through the assembly, which would allow imported natural gas to be incorporated into the energy mix. To maintain its climate ambitions, Costa Rica needs to avoid exploring its fossil reserves and the use of fossil gas as a transition fuel.

In 2019, Costa Rica reformed its Executive Decree No. 41578. With this reform, it extended the national moratorium on oil exploration and exploitation from September 2021 until the end of 2050 (Government of Costa Rica, 2019a). In September 2021, Costa Rica took a step forward by proposing that the moratorium be enshrined in law to protect it from reversal by future administrations (Dirección de Cambio Climático, 2021b).

In 2023, members of the legislature put forward a bill to declare Costa Rica as a country free of oil and gas exploration and exploitation. As of July 2024, the bill was approved by the Special Commission on the Environment and advanced to the Plenary for debate, where certain factions of the Legislative Assembly have filed numerous motions to obstruct its progress (Martinez, 2024).

There are two additional bills introduced by other parties in the Legislative Assembly that include a moratorium on oil and gas. One of them also seeks to close the Costa Rica Petroleum Refinery (RECOPE), while the other has a broader objective of eliminating fossil fuel use and decarbonising the economy. However, any discussion on the moratorium and its related bills has stalled for the coming months. The Legislative Assembly is currently debating ‘urgent’ bills in its extraordinary sessions, and deputies have decided not to prioritise this issue (Fernandez Calderon, 2024).

The Chaves administration has continuously reiterated its position against the bill, citing the potential economic value of exploiting Costa Rica’s fossil fuel reserves. As a result, they requested the help of Norway to conduct non-intrusive studies identifying potential oil and natural gas reserves, and are also considering the possibility of constructing a refinery in Limón (May Grosser, 2024). While Norway rejected the request, the president is reportedly seeking collaboration opportunities with other governments (Murrilo, 2024). At a time when countries should be moving away from fossil fuels, Costa Rica should focus on further increasing its renewable energy generation, avoid technology lock-in, and improve energy security.

Fossil gas is not a transition fuel and can hinder progress towards reaching both national and international climate objectives. The ‘Law to promote the energy transition in the fuel sector’, backed by the Ministry of Energy and Environment, is currently making its way through legislative proceedings. The bill would allow RECOPE, the state-owned petroleum refinery, to introduce transition fuels into its energy mix, including imported natural gas (Asamblea Legislativa de la República de Costa Rica, no date; Colindres Lagos, 2024). The proposed bill notably excludes synthetic fuels not derived from biomass, such as green hydrogen (Dobles, 2024).

Costa Rica was one of the founding members of the Beyond Oil and Gas Alliance. However, during COP27, the government decided to de-prioritise this initiative in its climate agenda, further signalling the current administration’s intentions to explore its fossil resources (Rodriguez, 2022).

Renewables

Costa Rica produces most of its electricity from renewable sources, but additions to solar and wind capacity have not been sufficient to make up for reduced hydropower production in recent years (DOCSE, 2024a). The source mix of electricity production in 2023 was 69.7% hydropower, 12.4% geothermal energy, 12.2% wind, 5.1% thermal energy powered by fossil fuels, 0.5% biomass, and less than 0.1% solar.

Costa Rica’s future renewable energy development is guided by the Generation Expansion Plan (PEG) 2022-2040, published in 2023 by the Costa Rican Electricity Institute (ICE). It defines a long-term development plan for the country’s power system based on the following criteria: favouring renewable sources, low fossil fuel dependency, energy security, diversification, sustainability, and low costs (Grupo ICE, 2023). The recommended scenario estimates an additional 2,125 MW of installed renewable capacity by 2040 compared to 2021, mostly from new solar (1,100 MW), wind (502 MW) and biomass (300 MW).

Costa Rica released its National Green Hydrogen Strategy in 2023 (MINAE, 2022a). With a potential production capacity of up to six million tonnes per year, green hydrogen could be used to satisfy industry, agriculture and energy needs in Costa Rica, as well as become an important export for the country. The transport sector would represent an estimated 91% of hydrogen demand in 2050, meeting 30–35% of the sector’s total energy demand.

Costa Rica’s predominantly fossil-fuel-based transport sector is responsible for a significant share of its emissions, making up around 76% of energy-related CO₂ emissions, or slightly under half of total national emissions in 2022 (Gütschow and Pflüger, 2023; IEA, 2024). According to its 2nd Biennial Update Report (BUR2), most of the emissions reductions in the transport sector will come from the increased use of electric transportation, both private and public (i.e. inter-urban train lines), modal shifts, and reduced demand (Ministerio de Ambiente y Energía, 2019). Costa Rica aims to reduce emissions from the transport sector by 27% by 2030 and 65% by 2050 under currently implemented mitigation measures.

Electric mobility

Under current policies, there has been a significant uptake in private electric vehicles, with the number of electric cars exponentially increasing from 349 in 2018, to 12,770 as of June 2024. The number of other electric vehicles, including motorcycles, has also grown since 2018 (Government of Costa Rica, 2024). While Costa Rica has reached a considerable market share of EVs, making up 12% in 2023, the total share of EVs in the vehicle fleet is still under 1% (OECD, 2023).

In 2018, Costa Rica implemented Law 9518 on incentives and promotion of transport electrification, which is expected to significantly contribute to meeting its NDC and long-term targets (Asamblea Legislativa de la República de Costa Rica, 2018). This law includes measures to expand the country’s public electric bus and rail fleet and develop supporting infrastructure for public transport such as priority lanes. It also incentivises private electric vehicles by introducing tax benefits and non-financial benefits such as exemptions from traffic restrictions, preferential parking, and promoting charging stations.

The National Plan for Electric Transportation 2018–2030 was developed in order to operationalise Law 9518 and establish national policies to promote electrification in the private, institutional and public sectors (MINAE, 2019). It is estimated that the law would result in 3 MtCO₂e of GHG emissions reductions per year. Other developments in line with Law 9518 include an intersectoral agreement to reduce emissions in the transport sector, signed in 2019 by the transport and environment ministries (Government of Costa Rica, 2019b).

In accordance with the overarching transportation electrification policies, Costa Rica has also advanced the deployment of key infrastructure to support its growing EV vehicle fleet. The number of charging plugs has increased from 139 to 355 between 2021 and 2024. On the other hand, the installation rate of fast charging points has not kept up. In 2021, 39 fast chargers for EVs were installed, but the total number only increased to 57 as of March 2024. The slow pace is mainly attributed to electricity distributors, who are the only ones allowed to install charging stations, already meeting their quotas. The Costa Rican Electric Mobility Association (ASOMOVE) has proposed new legislation to address this disparity by involving the private sector (Fonti, 2024).

Further developments include the advancement of public zero-emission vehicle fleets, which reached 37 public institutions in 2021 (Dirección de Cambio Climático, 2022). However, Costa Rica is still behind on electrifying its public transport fleet due to problems with financing and the current charging network being unsuitable. A potential project to scale-up electric buses is still early in the negotiation stage (Mackú, 2024).

Modal shift

In 2021, Costa Rica started a USD 1.9bn project to build 85km of electric light rail in the San Jose Greater Metropolitan Area as part of its plan to decarbonise its transport sector and incentivise modal shift (Green Climate Fund, 2021a). However, the Chaves administration abandoned this project, citing a lack of information about its economic viability (Pomareda García, 2022).

The government is currently considering the modernisation of three railway lines in the San José Greater Metropolitan Area, two of which would be electrified and the other maintained with diesel-powered units (Rojas, 2023). The plan is currently undergoing feasibility studies, so there is still some uncertainty about whether the project will materialise. INCOFER, the Costa Rican Railway Institute, has reportedly given up on plans to improve and expand the current passenger service to focus on this project (Morris Gray, 2024).

Another initiative, the Limón Electric Freight Train, had also been undergoing scrutiny by the Chaves administration but is moving forward again, although it will not be fully electrified (e.g. diesel-hybrid locomotive) (Pomareda García, 2024a; Rojas, 2024). The developments surrounding the electrification and improvement of public transit may put some of Costa Rica’s transport electrification and modal shift ambitions at risk.

Other initiatives

The government is preparing to introduce a 10% ethanol-gasoline mixture in gas stations starting in 2025, which could be used by a fifth of Costa Rica’s vehicle fleet (Pomareda García, 2024b). Establishing a biofuel mandate is an important pillar of the National Decarbonisation Plan and was also highlighted in Costa Rica’s National Development and Public Investment Plan 2023-2026. RECOPE had requested the government to eliminate the target from the previous iteration of the development plan, but its implementation is starting to gain traction (Dirección de Cambio Climático, 2022; MIDEPLAN, 2022).

Costa Rica has no plans to phase out the sale of ICE vehicles and did not sign the Glasgow declaration on accelerating the transition to 100% EVs during COP26. However, there has been a rapid, five-fold increase in the electric vehicle fleet since 2018, due to the current policies in place to incentivise their uptake (Government of Costa Rica, 2024).

Costa Rica’s residential and commercial buildings made up only 5% of energy-related CO₂ emissions in 2023 (IEA, 2024).

As part of its NDC and National Decarbonisation Plan, Costa Rica has outlined mitigation measures including the use of wood, bamboo, and other low-emissions construction materials, applying low-emissions principles and technologies to all new buildings built by 2030, promoting energy efficiency practices in existing buildings, and strengthening existing regulations and standards to promote sustainable practices (Government of Costa Rica, 2019c, 2020). The latter measure is being implemented on a city level with the support of the Green Building Council. Additionally, Costa Rica has supported the development of several low-emission building projects, reaching 127 certified buildings in 2022, including LEED and EDGE certifications as well as regional voluntary certification schemes (Dirección de Cambio Climático, 2022).

One of the primary objectives of Costa Rica’s National Circular Economy Strategy (ENEC), released in 2023, is to promote circularity in the construction and infrastructure industries (MINAE, 2023). This largely focusses on improving the recovery rate of construction and demolition waste, thus reducing the dependence on virgin natural resources and the embedded emissions from their extraction and use. The strategy outlines implementation measures such as defining purchasing and construction guidelines in the public and private sectors to promote material reuse and energy efficiency

Costa Rica’s agriculture sector made up around 21% of total national emissions in 2022 (excl. LULUCF) (Government of Costa Rica, 2021; Gütschow and Pflüger, 2023). Along with the industry and services sectors, it plays an important part in Costa Rica’s economy (OECD, 2023). For the agriculture sector, the NDC includes measures to increase access to finance for the procurement of low-carbon technologies, particularly for small and medium-sized enterprises (Ministerio de Ambiente y Energía, 2015b).

Costa Rica released its National Low-Carbon Livestock Strategy in 2015, which aims to reduce inefficient pasture area as well as the total GHG emissions of animals by 2% per year. The strategy seeks to scale up pilot projects such as the one in the Livestock NAMA and mitigate methane emissions through rotational grazing, pasture improvement, and silvopastoral practices. As of 2022, over 1600 farms have implemented the livestock NAMA, comprising 8% of the national herd and almost 13% of the grazing area (Dirección de Cambio Climático, 2022; OECD, 2023).

Since then, Costa Rica has implemented further actions to implement this strategy and the measures outlined in the NDC and NDP, such as the Regional Plans for Climate Action and Risk Management and the ‘Intersectoral agreement for the reduction of emissions in the agriculture sector’ (Ministerio de Ambiente y Energía, 2019). The government is also working on a follow-up to the Low-Carbon Livestock Strategy by developing a more comprehensive Sustainable Livestock Policy with separate focuses on dairy and meat production (Dirección de Cambio Climático, 2022).

Costa Rica launched a Low-Carbon Coffee NAMA in 2013. It aims to improve the emissions intensity of coffee production by reducing nitrous oxide emissions through reduced fertiliser use, promoting soil carbon sequestration, and improving energy and water use efficiency. By the end of the project in 2021, the NAMA was estimated to have reduced generated emissions by 10%, while the government announced at COP26 that around 70% of Costa Rican coffee was produced with low-carbon principles (Mitigation Action Facility, 2023). Costa Rica is piloting additional NAMAs focused on banana, rice, and sugarcane production (OECD, 2023).

Costa Rica’s Sustainable Landscape Initiative 2022-2030, developed in response to the Glasgow Forests Declaration, recognises the finite capacity of forests to sequester carbon and highlights the importance of emissions reductions in the agriculture sector to achieve carbon neutrality (MINAE, 2022b; Museo del Jade and Grupo INS, 2023). This phase of the initiative will focus on scaling up the current NAMAs, as well as additional actions to reduce on-farm fossil fuel consumption, promote biomass production from agricultural residues, and decrease fertiliser use. The initiative also aims to increase the tree coverage on agricultural land through mechanisms such as Payments for Environmental Services (PES).

The LULUCF sector is significant in Costa Rica, with 59% (3 Mha) of the country estimated to be covered by forest in 2020 (Global Forest Watch, 2024). Historical emissions in the forestry sector, peaking at 29 MtCO₂e in 1990 due to high deforestation, show a stark decrease since 2000, reaching -3 MtCO₂e in 2017—meaning that sinks increased more than emissions in the sector. According to the latest national inventory report, the land use and forestry sector became a net emissions sink in Costa Rica in 2014. This sink had increased until the latest recent data point from 2017, when it represented around 20% of the country’s economy-wide emissions (Government of Costa Rica, 2021).

The LULUCF sector is expected to become a larger sink as Costa Rica is counting on the sector to achieve its carbon neutrality goal. Compared to 2017, the LULUCF sink needs to almost double by 2050 to meet the emissions trajectory outlined in the National Decarbonisation Plan (Government of Costa Rica, 2019d).

For this purpose, the government has established policies such as the National Programme for Carbon Neutrality (PPCN), a carbon trading mechanism, in which avoided, reduced, removed, and stored emissions that have been monitored, reported, and verified are tradeable domestically on a voluntary basis (Salgado et al., 2013).

The 1996 Forestry Law was pivotal in reversing Costa Rica’s deforestation. It not only introduced the National Fund for Forest Financing and offered Payments for Ecological Services (PES) to landholders to promote forest protection and reforestation, but also banned all clearing of established forests (Sarmiento et al., 2024).

Since 2014, Costa Rica also provides PES under the REDD+ program (Government of Costa Rica, 2019d; Green Climate Fund, 2021b). In 2022, it became the first country in the Latin America and Caribbean region to receive payments from the World Bank’s Forest Carbon Partnership Facility for reducing emissions from REDD+ activities (World Bank, 2022). Costa Rica was paid USD 16.4mn for 3.28 MtCO₂e in emissions reductions from deforestation and forest degradation by during 2018 and 2019.

Costa Rica signed the Glasgow Leaders' Declaration on Forest and Land Use at COP26 (Government of Costa Rica, 2021) and is also a founding member of the Forest and Climate Leaders’ Partnership (FCLP) launched at COP27, which aims to deliver the commitment to halt and reverse forest loss and degradation made in Glasgow through mechanisms such as international collaboration, mobilising finance, and supporting Indigenous Peoples’ and local community initiatives (FLCP, 2022).

To operationalise the pledge made in the Glasgow Forests Declaration, Costa Rica proposed its Sustainable Landscape Initiative 2022-2030 (MINAE, 2022b; Museo del Jade and Grupo INS, 2023). While Costa Rica has already achieved zero net deforestation, one of the main pillars of the initiative is to maintain it by maintaining and improving forest area and its carbon reserves.

We do not include the forestry sector in our rating—please see the CAT’s NDC ratings and LULUCF page for more details.

In 2022, the waste sector accounted for about 17% of Costa Rica’s total national emissions (excl. LULUCF) due to the country’s high reliance on landfills for waste disposal (Government of Costa Rica, 2021; Gütschow and Pflüger, 2023; OECD, 2023). A comprehensive waste management system centred on the prevention, reduction, reuse, valorisation, treatment and proper disposal of waste with maximum efficiency is identified as a main action area in Costa Rica’s NDC (Government of Costa Rica, 2020).

While Costa Rica has made strides in its integrated waste management policies and regulatory framework, only 7% of total waste generated was recycled or composted in 2021, while the majority went to landfill (OECD, 2023). Existing regulations on extended producer responsibility do not cover major waste streams and there are currently no incentives for the use of recovered materials as production inputs, further limiting recycling rates.

As part of its National Decarbonisation Plan, Costa Rica is developing sectoral strategies to identify and reduce emissions from waste. This will complement the already implemented National Composting Plan, which aims to reduce the amount of organic waste going to landfills and to increase Costa Rica’s recycling capacity (Dirección de Cambio Climático, 2022). Costa Rica has also launched its Solid Waste NAMA to improve the collection and treatment of organic waste across the country, including the installation of biodigesters which capture residual gases from the decomposition of organic matter to use as fuel for heating or electricity generation (Dirección de Cambio Climático, 2022).

In 2023, the Ministry of Energy and Environment launched the National Circular Economy Strategy (ENEC) as a regulatory framework to promote efficient waste management and less-intensive natural resource consumption (MINAE, 2023). One of the primary objectives of the strategy is to support the National Decarbonisation Plan by reducing GHG emissions from the treatment and disposal of solid waste and wastewater and from the consumption of primary raw materials across different sectors.

Methane plays a significant role in Costa Rica’s emissions profile and made up approximately 32% of total national emissions in 2022 (Government of Costa Rica, 2021; Gütschow and Pflüger, 2023). Almost all methane emissions are attributed to the agriculture and waste sectors.

Costa Rica signed the Global Methane Pledge at COP26 and has considerable measures in place to reduce its emissions from these sources, such as the Livestock and Solid Waste NAMAs and the National Composting Plan (FAO, 2023). The methane target is currently not incorporated into Costa Rica’s NDC, but its inclusion would bring Costa Rica considerably closer to reaching its NDC target. The 30% emissions reduction target relative to 2021 outlined in the pledge would translate to approximately 1.5 MtCO₂e in reductions, or slightly under 10% of total national emissions (Government of Costa Rica, 2021; Gütschow and Pflüger, 2023).