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Review of Chile’s decarbonization efforts

The Florence School of Regulation invited Jorge Moreno, Partner at inodú, to discuss inodú’s latest publication, which reviews Chile’s decarbonisation efforts.

In the podcast, Pradyumna Bhagwat (Research Fellow, FSR) and Mr Moreno discuss decarbonisation measures undertaken by the Chilean Government, their impact and recommendations for rapid decarbonisation in the future.

Chile has committed to reducing its CO2 emission per GDP unit to 30% below the 2007 levels by 2030 as ratified under the Paris agreement. In view of reaching carbon neutrality by 2050, several steps have been taken by the Chilean Government. Working groups were established to develop a conversion and retirement schedule for existing coal generation facilities. An example of the impact is the June 2019 agreement between generation companies and the government to retire eight coal units (1047 MW) over 5 years.

Listen to the Podcast!

Some of the key recommendations presented in their article while closing coal plants are: 1) Provide certainty on new environmental requirements such as emissions restrictions; 2) Communicate the closure in advance; 3) Establish an early definition of goals and purpose for the site; 4) Conduct environmental research early for the site; 5) Address the economic challenges created by the plant’s decommissioning; 6) define the closing firm’s responsibility; 7) Use multi-stakeholder groups to identify potential uses for the site; 8) Establish opportunities for third parties to present possible development alternatives for the site; and 9) Define the role of the municipality and key local stakeholders.

Finally, Mr Moreno comments that decarbonization cannot be addressed effectively and efficiently relying just on one policy; he states that in order to effectively decarbonize the system a broad set of policy adjustments and market trends must be leveraged, for example: 1) The flexibility of the thermoelectric generation portfolio; 2) Unit commitment procedures used by the Independent System Operator; 3) The evolution and competitiveness of alternatives to convert or replace coal facilities; 4) Reliability metrics and adequacy goals; among others. Particularly, he indicates that enhancing the current carbon tax in Chile could help achieve concrete decarbonization goals and help satisfy the needs of stakeholders by providing more certainty and urgency to the decarbonization efforts.

Read the full article here.