Chile Plans to Enact the First Carbon Tax in South America

The proposal this week from newly elected Chilean President Michelle Bachelet calls for charging thermal power plants with a generation capacity of at least 50 megawatts a tax of $5 per metric ton of carbon dioxide emitted.  Chile is the world’s leading copper producer, and many copper mines in the country are powered by coal-fired power plants that rely on imported oil and gas to operate.

“These companies can incorporate technologies to reduce pollutants or simply change the fuel they use,” Chile’s new environmental minister, Pablo Badenier, told local media. “Once you have the taxation in place, you open a range of possibilities to reduce emissions.”

Mexico placed a carbon tax on several types of fossil fuels starting January first, including gasoline.

Importing around four-fifths of its current fossil fuel demand is economically disadvantageous as well as environmentally costly for Chile, and the country is looking to harness its vast renewable energy potential going forward.  Last year, Chile doubled its renewable energy target, requiring utilities to get 20 percent of their power from renewable sources by 2025.  The Atacama Desert in Chile has extremely high potential for solar power generation — it has the highest levels of solar irradiance (a measure of the sun’s power) on the planet — and the country has good wind power potential both on and offshore.  It could also develop significant geothermal power by taking advantage of its position along the Ring of Fire, a tectonic hot spot.

Chile Plans to Enact the First Carbon Tax in South America