Costa Rica

Overall rating
Almost Sufficient
Policies & action
1.5°C Paris Agreement compatible
< 1.5°C World
Domestic target
Almost Sufficient
< 2°C World
Fair share target
1.5°C Paris Agreement compatible
< 1.5°C World
Cimate finance
Not applicable
Net zero target

year

2050

Comprehensiveness evaluated as

Acceptable
Land use & forestry

impact on overall emissions is

Relevant
Policies & action
1.5°C Paris Agreement compatible

We rate Costa Rica’s policies and actions—based on our assessment from 30 July 2020—as “1.5°C Paris Agreement compatible”. The “1.5°C Paris Agreement 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’s projections from policies and action will be updated in the coming months, and its rating could change.

Note: the assessment below has not been updated and shows the status of the last update (30 July 2020).

Costa Rica is on track to achieving its 2030 NDC emissions reduction target under both current and planned policy scenarios. The current policy projections include new policies that support the electrification of its transport sector, the country’s largest source of greenhouse gas (GHG) emissions. The new National Plan for Electric Transportation, published in early 2019, contains a set of strategic actions and a plan for their implementation, including multiple fiscal, financial, and regulatory policy instruments to support acquisition and use of electricity vehicles. The planned policy projections range is based on different degrees of implementation of the National Decarbonisation Plan.

Costa Rica has launched multiple initiatives to facilitate the implementation of its NDC. Its climate-related policies and programmes include the second phase of its National Programme for Carbon Neutrality—a carbon neutral certification scheme for businesses and municipalities, Nationally Appropriate Mitigation Actions in the agricultural sector, and the National Energy Plan.

In February 2019, Costa Rica made a bold move to extend its moratorium on oil extraction and exploitation from 2021 until the end of 2050.

Costa Rica’s electricity generation runs on a very high share of renewable sources and aims to reach a full-year 100% renewable electricity generation share by 2021. In 2018, the nation beat its own record by generating 98% of electricity from renewable sources - for the fourth consecutive year, only requiring non-renewable options in moments of high demand.

Policy overview

With currently implemented policies and the economic impact of the COVID-19 pandemic, Costa Rica’s emissions levels could increase by between 90% and 117 above 1990 levels by 2020 and between 69% and 137% above 1990 levels by 2030, excluding land use, land use change and forestry (LULUCF). Current policy projection before COVID-19 result in emissions between 12.9 and 16.5 MtCO2e in 2030. The effect of the economic disruption caused by the pandemic reduces emissions projections to 11.0-15.4 MtCO2e in 2030. Total emissions excluding LULUCF increased sharply in the early 1990s, and have steadily increased, though at a lower rate since 2000, rising from 6.5 MtCO2e in 1990 to 14.4 MtCO2e in 2015. The lower range of Costa Rica’s current policy emissions pathway would lead to the overachievement of its NDC and represents an improvement in comparison to its previous projections (Ministerio de Ambiente y Energía, 2015a, 2019).

Costa Rica has put in place several policies to reduce GHG emissions. Most of the planned abatement is expected to come from the LULUCF and transport sectors. Energy use and agriculture are also important pillars of Costa Rica’s mitigation plans. Since the implementation of the National Climate Change Strategy (ENCC) in 2008, Costa Rica has been working to design mitigation actions in energy efficiency and conservation, renewable energy and agriculture (NAMA Database, 2011).

Costa Rica’s National Programme for Carbon Neutrality—first implemented in 2012—is a government initiative to reach carbon neutrality. Under this programme, the government has 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).

At the end of 2017, the government launched a second phase: Carbon Neutrality Programme 2.0 (PNCC 2.0) (Ministerio de Ambiente Y Energía and Presidente de la República, 2017).With this update, the programme has expanded the certification categories and aims to attract more businesses and encourage other actors such as municipalities to participate (Gobierno de Costa Rica, 2017).

As a means of facilitating the implementation of the 2030 goal, in 2017 Costa Rica created a Scientific Council on Climate Change (or 4C) (Ministerio de Ambiente y Energía - Gobierno de Costa Rica, 2017b) and Citizen Consulting Council on Climate Change (or 5C) (Ministerio de Ambiente y Energía - Gobierno de Costa Rica, 2017a).

Energy supply

The VII National Energy Plan 2015-2030, approved on September 14, 2015, supports the continuation of renewable energy development. The aspirational goal is to achieve and sustain 100% of electricity generation coming from renewable energy by 2021 (Ministerio de Ambiente y Energía, 2015c). In 2014, 90% of electricity was already generated from renewable sources, mainly hydropower (IEA, 2016) and Costa Rica has already been generating 100% renewable electricity at certain times of the year and over 98% throughout the whole year since 2015. This makes Costa Rica the country with the highest share of renewables in the region, see chart below. Further advances towards the 100% goal are expected from the National Program for Carbon Neutrality that promotes hydro, geothermal, wind, solar and biomass as renewable energy sources.

Share of renewable electricity generation

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 (Ministerio de Ambiente y Energía - Gobierno de Costa Rica, 2017a).

Transport

For the transport sector, Costa Rica has implemented policies to foster electrification, modal shift, and energy efficiency. According to the NDC, 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) (Ministerio de Ambiente y Energía, 2015b). With a robust set of policy instruments, Costa Rica aims to reduce emissions from the transport sector by 65% by 2050 under currently implemented mitigation measures (Ministerio de Ambiente y Energía, 2019).

In 2018, Costa Rica implemented Law 9518 on incentives and promotion of transport electrification, which is expected to increase significantly under current policy projections (see chart below) (Asamblea Legislativa de la República de Costa Rica, 2018). This law addresses both public and private transportation (incl. government vehicles and freight). For private vehicles, it establishes financial and non-financial incentives to promote electric vehicles. The financial incentives include tax benefits—for value added, consumption, ownership, import and company taxes—of up to 5,000 USD per vehicle (3 million CRC) (Artavia, 2017). The non-financial benefits include a labelling programme, exemption from traffic restrictions, preferential parking, as well as the promotion of charging stations for electric vehicles.

EV market share

For public transportation, the law, in force since 2018, establishes the use of renewable energy as a national priority in all modes of transportation including train, freight, buses, and taxis (Asamblea Legislativa de la República de Costa Rica, 2018). It establishes multiple fiscal, financial, and regulatory policy instruments to support acquisition and use of electricity vehicles, all of which are significant measures, as the transport sector is the biggest source of emissions in Costa Rica. For its implementation, the law also mandates the publication of a “National Plan for Electric Transportation.” Based on national estimates of emissions reductions from Law 9518, as reported in the National Plan for Electric Transportation (Gobierno de Costa Rica, MINAE and MOPT, 2019), emissions will be reduced by 3.0 MtCO2e in 2030, which translates to 3 MtCO2e of GHG emissions reductions.

Other developments in line with Law 9518 include an intersectoral agreement to reduce emissions in the transport sector (Gobierno de Costa Rica, 2019a), which was signed in February by the Transport Ministry (MOPT, in Spanish) and Energy & Environment Ministry (MINAE, in Spanish). Costa Rica also announced its intention to build an electric cargo train (Córdoba, 2019), as well as to add 34 fast changing stations to the network by end of 2019 (AFP and The Tico Times, 2019). Additionally, a law on bicycle mobility and security to incentivise cycling was approved by the lower chamber in January 2019 (Alfaro, 2019).

Agriculture

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 size enterprises (Ministerio de Ambiente y Energía, 2015b). Costa Rica also has a National Low-Carbon Livestock Strategy, which aims at replicating pilot projects such as the one in the Livestock NAMA. In 2015, the government released its strategy for low-emissions agriculture, which aims, for example, to reduce the inefficient pasture area as well as reduce total GHG emissions of animals by 2% per year (Estrategia para la Ganadería Baja en Carbono - ENGBC). Since then Costa Rica has implemented further actions to implement this strategy, 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). These measures have not yet resulted in absolute emissions reductions, projections nonetheless show a slow decrease in emissions post 2020.

Forestry

Over the last 20 years, Costa Rica had an average LULUCF sinks whose magnitude was more than 20% of all other emissions. Costa Rica should work toward maintaining this LULUCF sink.

National projections for the LULUCF sector from Costa Rica’s 2nd Biennial Update Report show a decreasing emissions trend between 2015 and 2050 (Ministerio de Ambiente y Energía, 2019). For the LULUCF sector, the government intends to make an extensive use of funds from REDD+ and carbon trading (Ministerio de Ambiente Energia y Telecommunicaciones, 2009; Ministerio de Ambiente y Energía, 2014). However, many of the accounting details for programmes like REDD+ in a post-2020 remain uncertain (OECD, 2014).

The LULUCF sector is expected to become a larger sink in the future as Costa Rica is counting on the sector to achieve its carbon neutrality goal. It does this through a carbon trading mechanism, the Costa Rican Compensation Units (UCC, in Spanish), which represents avoided, reduced, removed, and stored emissions that have been monitored, reported, as well as verified. These units are tradeable domestically on a voluntary basis (Salgado et al., 2013).

Historical emissions in the forestry sector show a decrease between 1990 and 2000—meaning that sinks increased more than emissions in the sector. Between 2000 and 2010 emissions flattened and in 2010 they started to increase. According to national inventory reports (Ministerio del Ambiente Energía y Telecomunicaciones and Instituto Meteorológico Nacional, 2009; Ministerio de Ambiente y Energía and Instituto Meteorológico Nacional, 2012, 2014), this was due to increased emissions from land use change between 2000 and 2012, such as forests being converted for agriculture and grasslands. Sinks from forests—derived from biomass change and abandoned lands—also increased between 2000 and 2012 but have not outweighed emissions since 2010—reversing the overall trend.

Emissions excluding LULUCF could increase significantly from historical levels and require attention to further decarbonise the economy. We do not include the forestry sector in our rating—please see the CAT’s NDC ratings and LULUCF page for more details.

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