Chile has taken the lead in the fight against climate change, uniting its intentions and actions. The Chilean Congress has recently approved a carbon tax program to help reduce the country’s greenhouse gas emissions and meet its voluntary target offered at COP16 of cutting these gases 20 percent from 2007 levels by 2020. Michelle Bachelet, President of Chile and former Executive Director of UN Women, supported the new environmental tax legislation, making the country the first in South America to tax carbon dioxide (CO2) emissions.
Part of a broad tax reform, Chile’s carbon tax will target the power sector, particularly generators operating thermal plants with installed capacity equal or larger than 50 megawatts. As of 2010, thermal power accounts for about 65% of total installed capacity in the Chilean electricity sector. These installations will be charged $5 per tonne of CO2 released, except for those fueled by biomass and smaller installations, which will be exempt from the measure. The new tax is meant to force power producers to gradually move to cleaner sources. Since the country supplies only around 30% of its domestic energy, renewables could put a sizable dent in fuel imports. Chile’s government will start measuring carbon dioxide emissions from thermal power plants in 2017 and the new tax will going into effect in 2018.
In the region, Chile’s greenhouse gas emissions are about 7 percent of Brazil’s, and 22 percent of Argentina’s emissions, according to 2011 data compiled by the World Resources Institute. Globally, Chile represents only 0.27 percent of GHG emissions, according to the Chilean Environmental Ministry. Even though this means that Chile’s potential GHG decreases due to this tax will be modest on a global scale, it nonetheless represents an important beginning.
Worldwide these are rough times for carbon taxes aimed at mitigating global warming. Countries with more developed economies, such as Korea with a GDP valued at US$ 1.305 trillion, South Africa (US$350.6 billion) and Australia (US$1.561 trillion) have changed their minds about carbon tax programs, setting back the results of the Conference of Parties negotiations under the UNFCCC. Chile, on the other hand, as one of Latin America’s fastest growing economies with a GDP calculated at US$ 277.2 billion in 2013, conducted a major national political discussion and chose to go ahead, challenging those who believe otherwise. Chile’s forward thinking and real courage has developed something that is robust in terms of policies, taking the plunge to meet its international commitments and consolidating its leadership under the Independent Alliance of Latin America and the Caribbean (AILAC) and the world.