Carbon Pricing Chile Project

The Carbon Pricing Chile Project, under the Partnership for Market Readiness initiative, is an opportunity to support national mitigation efforts. With the strengthening of regulatory and institutional capacities for the implementation of green taxes and for the design and implementation of a Monitoring, Reporting and Verification (MRV) system for their application, it has contributed to the evaluation of options, future scenarios and the elaboration of concrete proposals to build a more complete system of carbon pricing instruments.

At the beginning of 2013, the World Bank approved the PMR Project for Chile with a grant of US$3 million to implement the first phase (2015-2017). The Ministry of Energy is the focal point and is responsible for the project’s technical implementation. The project also has the direct collaboration of the Ministry of the Environment and the Superintendence of the Environment, responsible for the implementation of green taxes and their MRV, and the Chilean Cooperation Agency for Development (AGCID), the entity where the financial and accounting administration is located.

Vision, mission and values

Vision:  To contribute to the adoption of a model of carbon pricing instruments adapted to Chile’s economic, political and social context, which will contribute to national efforts to mitigate climate change and contribute to the country’s sustainable development and low carbon growth.

Mission: Carbon Price Chile seeks to be a participatory, robust and effective platform for the evaluation of carbon pricing instruments in the country. This, in line with national climate change mitigation commitments, will create and strengthen national capacities, fostering an open and informed dialogue with public and private sector actors and decision makers for the generation of future policies and actions in this area.

Values:

Objectives and expected results

General Objective:
To facilitate an informed dialogue between decision-makers and other interested parties on the best alternatives for carbon pricing instruments in Chile over the mid and long term, their contribution to reducing GHG emissions in the context of meeting national climate change mitigation commitments and their role in our country’s future sectoral climate policies.
Pillar I
Objective:  To evaluate options and scenarios for the implementation of a more comprehensive system of carbon pricing instruments in Chile in the future through a transparent process of consultation and participation.

Expected Results: 

  1. 1. Technical proposals and recommendations for a more comprehensive system of carbon pricing in the future.
  2. 2. Analysis of opportunities and challenges imposed by the Paris Agreement.
  3. 3. International agreements and collaboration agreements.

Pillar II
Objective: Strengthen the regulatory and institutional capacities for the implementation of green taxes and for the design and implementation of a Monitoring, Reporting and Verification System (MRV) for their application, in whose design the technical feasibility of infrastructure to house other possible future carbon pricing instruments is considered.
Expected Results: 

  1. 1. MRV system for the implementation of green taxes.
  2. 2. Strengthened and installed technical capacities in the public and private sectors
  3. 3. International collaboration agreements and conventions

Pillar III
Objective: Achieve national and international positioning on developments and progress in carbon pricing instruments in Chile.
Expected Results: 

  1. 1. Set up and moderate a national debate on carbon pricing instruments
  2. 2. Knowledge, awareness and training on carbon pricing instruments.
  3. 3. Communicational positioning of carbon price instruments in the agenda.

Components (work areas)

Component 1: Regulatory, Institutional, Economic and Co-benefit Analysis and International Integration in Carbon Price Instruments (CPI).
The main objectives are:

  • Evaluate and strengthen the country’s regulatory and institutional capacity in CPI matters.
  • Evaluate options and future scenarios for implementing a more comprehensive CPI system from 2020 onwards (e.g. a pilot ETS), hosting a robust MRV system and promoting the internalization of socio-environmental costs (externalities) of electricity generation and other sectors, while serving as a relevant axis of climate mitigation in the energy sector.

Component 2: Design and implementation of a Measurement, Reporting, Verification (MRV) and GHG Registration framework.
The main objectives are:

  • Develop and implement an MRV system for the implementation of the CO2 tax, whose design considers the technical feasibility and infrastructure necessary to host other possible CPIs in the future.
  • Create technical capacities, both in the public and private sector, to manage and control the required MRV system.

Component 3: Design and implementation of a Communication, Participation and Consultation Strategy for the PMR Project.
The main objectives are:

  • To set up and moderate a national debate on climate action in the energy sector linked to IPC.
  • Formation of public-private partnerships for the generation of a future CPI model, adapted to the Chilean context.
  • Creation and strengthening of knowledge in the public and private sector on CPIs and MRVs and exchange of experiences and best practices with leading countries in the field.
  • To strengthen and deepen Chile’s presence in the international debate on CPIs.

Keys to the Carbon Pricing Chile Project

  • Chile is highly vulnerable to the impacts of climate change. This is why it strongly supports the implementation of international commitments on mitigation.
  • Carbon Price Chile, within the framework of the World Bank’s PMR initiative, is a great opportunity to support the country’s efforts to mitigate climate change.
  • Carbon Price Chile has strengthened regulatory and institutional capacities around the implementation of the carbon tax as well as the design and implementation of an MRV system for its application. It has contributed to the evaluation of options, scenarios and the creation of concrete proposals to build a more complete system of carbon pricing instruments in the future.