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Chile set to pass Latin America’s second carbon tax

Proposed tax reforms will make polluters pay US$5 per tonne of carbon emissions

With its extensive coastline and sunny weather, Chile is well equipped to deploy more renewable energy (Pic: alobos Life/Flickr)

With its extensive coastline and sunny weather, Chile is well equipped to deploy more renewable energy (Pic: alobos Life/Flickr)

By Sophie Yeo

Chile is set to approve a carbon tax next week, making it the second country after Mexico in Latin America to put a price on polluting.

The carbon tax will go before the House of Representatives in the first week of September, as part of a broader package of tax reforms.

If approved, Chile will start charging US$5 per tonne of CO2 from 2017, around $2 more than in Mexico.

“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,” said Gariazzo Rodrigo Pizarro, head of the division of environmental economics in the Chilean government.

He added: “It is quite a significant tax for the Chilean economy.”

Clean energy potential

The package includes other environmental taxes intended to drive down air pollution and tackle climate change.

Pollutants including particulate matter, nitrogen oxides and sulphur dioxide will also be taxed, and there will be a levy on imported vehicles.

The measures are part of a broader series of reforms introduced by Chile’s new Socialist government, aimed at increasing taxes for big businesses and lowering them for individuals.

Most of the funds raised by the new taxes are likely to be channeled towards Chile’s sweeping education reforms.

The government hopes the additional financial burden of using fossil fuels will encourage greater investment in renewable sources of energy.

“We believe that changing the price allocation through taxes is enough to generate a greener economy,” said Pizarro.

Chile has large potential for solar and wind energy, with vast deserts and 6,400km of coastline. Yet the country still imports around 70% of its domestic energy supply.

Chile has voluntarily committed to reduce its greenhouse gas emissions 20% by 2020 based on 2007 levels.


In May, the tax reform bill was passed by Chile’s House of Representatives. It was then passed to the Senate, where minor changes were made, including extending the tax to all vehicles, rather than just those powered by diesel.

Whether the law is passed depends on these changes being approved once passed back to the House.

Latin America has seen a flurry of climate legislation in recent years. As well as implementing a carbon tax, Mexico passed a landmark climate change law in 2012. Colombia has announced that it intends to draft its own law by November.

Chile’s new carbon tax is to remain stable throughout the current administration. But the next government could extend measures, said Pizarro, for example by introducing a voluntary trading system or ramping up the price.

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  • Sabe_Moya

    Meanwhile, the Chilean government rejects low-polluting and highly sustainable hydro power in its Aysén region, in favour of continuing to burn wood, even subsidising wood burning, providing its regional capital with the highest level of air pollution in the entire country. And the climate change that it pretends to be afraid of would result in turning its Atacama desert into a highly productive agricultural area. Chile: high on populist emotion and trendy hand-waving, low on science and pragmatism.

  • LouiseStonington

    When most of the world is powered with solar and other low carbon sources we will look back on this time as crazy. What were we thinking, waiting for so long and letting greenhouse gas emissions overheat our world, burning the forests, flooding the seacoasts, killing the chain of life in the oceans and displacing millions, maybe billions of people. Thank you to Chile.
    The source of most of the accumulated excessive warming gases in the air is the US. It is time for us to change the laws that have favored oil, coal and natural gas for a century and given them a hammerlock on the energy industry. We need laws that charge fossil fuels for their costs instead of dumping them on taxpayers. We need to push back against fossil fuel propaganda, to take pity on the employees of that industry, and help them do the right thing – create a clean energy economy.
    If you skipped science classes – check NOAA, NASA, World Bank, National Academy of Sciences on whether climate change is real, is caused by people and is deadly serious.
    If you don’t know what to do, check out Renewable Energy World, or Triple Pundit or Citizens Climate Lobby.

    • mistyeyrie

      Which most of the world are you talking about ? They have sold the world a non-existent Carbon bogey.
      So why did Greenpeace shut down a hydro project in Chile ?
      It is clean and green and all that.
      The water is free, maintenance only, would have halved your OIL bill.
      Cut that much Carbon. But no, the Earth will Climate Change…Boooo…

      • Sarah Chen Lin

        Most environmental NGOs are actually against hydro projects in case you didn’t know. Building dams to generate electricity is actually more detrimental to the environment, poses more risk for the people living near the area and harms the economy on the long run. It is a misconception that it is a “green” and “clean” energy source. I don’t blame you if you don’t come from an environmental science background but I suggest you read up on it.

    • Sarah Chen Lin

      It’s really sad to see most people still don’t understand or believe in climate change but fast forward 50 years from now (or perhaps even sooner) and we’ll be the ones telling them “we told you so” hahahaha But I’d rather we all work together now and avoid that kind of awkward situation in the future.

      “First they ignore you, then they ridicule you, then they fight you, and then you win” =]

  • Jack Horton

    Like its related ideology of liberalism, the cult of man-made global-warming is fundamentally unserious.

  • Bilbo Baggins

    There is no evidence that the natural causes of climate change, such as solar activity, are somehow being overwhelmed by mankind.