Chile to introduce major new climate laws
Climate legislation across Latin America is set for another significant step forward with the government in Chile preparing to introduce the country's first carbon tax
Climate legislation across Latin America is set for another significant step forward with the government in Chile preparing to introduce a suite of policies including the country's first carbon tax.
The proposal was presented this week by President Michelle Bachelet (pictured right) and will include taxes on nitrogen oxide and sulphur dioxide, as well as levies on imported diesel-fuel vehicles in a bid to cut greenhouse gas (GHG) emissions.
If approved by the Congress, the new legislation will impose a charge of $5 per tonne of carbon dioxide (CO2) emitted on thermal power plants with a generation capacity equal or higher than 50 megawatts (MW).
New legislation will also include taxes on nitrogen oxides and sulphur dioxide, as well as new vehicle levies in a bid to cut greenhouse gas (GHG) emissions.
The proposal is part of a broader fiscal reform that the government is targeting to increase revenues and fund new social policies.
Gariazzo Rodrigo Pizarro, head of the division of environmental economics in the Chilean government, said: "Chile is not a great contributor to greenhouse gas emissions, but we are very vulnerable. It is in our national interests to see significant commitments in terms of climate change."
The move underlines Latin America's emerging status as a leading low carbon region.
Mexico has introduced a wide-ranging Climate Change Act that includes a tax on various fossil fuels averaging $3 per tonne of CO2.
Bolivia and Uruguay have introduced various climate policies while Colombia is working towards similar legislation.
President Bachelet has been critical of Chile’s use of fossil fuels which currently generate around 80 per cent of the country’s energy capacity.
Chile has a voluntary target to reduce GHG emissions by 20 per cent by 2020 compared to 2007 levels.
The government expects the new tax to lead power companies towards low carbon energy projects.
Pablo Badenier, Chile’s Minister of the Environment, said: "These companies can incorporate technologies to reduce pollutants or simply change the fuel they use. Once you have the taxation in place, you open a range of possibilities to reduce emissions."
Last year, Chile doubled its renewable energy target, requiring utilities to get 20 per cent of their power from renewable sources by 2025.
Chile’s renewable energy capacity grew 40 per cent in 2013 to just over one gigawatt, and more than ten times that capacity of energy has been proposed in other renewable projects.
The government has already approved a number of large-scale solar projects in the Atacama Desert region that will produce hundreds of MW of power.
Wind farms are also under construction in the Atacama region in Northern Chile, with the construction of a 235 MW project from Mainstream Group recently approved.
A study from Boston Consulting Group has estimated that the power generation sector in Chile will pay around $350 million of tax on CO2 emissions in 2018, when it is scheduled to be implemented.