Climate Action 2014-2015

CLIMATE FINANCE
PRICING CARBON
IN CHILE:
GREEN TAX REFORM
By Pablo Badenier Martinez, Minister of the Environment, Chile
Since ratifying the United Nations Framework Convention on Climate Change (UNFCCC) in
1994 and signing the Kyoto Protocol in 2002, Chile has actively engaged in the establishment
of robust national policies in response to climate change. The recent ‘green’ legislation has
many innovative aspects and is establishing Chile as a leader in equitable taxation.
In 1996, the Government of Chile
established a National Advisory
Committee for Global Change, which
played an important role in formulating
initial national positions for international
negotiations and creating national policy
instruments for climate change. Fifteen
years later, in 2010, the Climate Change
Office (OCC) of the Ministry of the
Environment was established and has
continued with progress in relevant
environmental legislation. Now Chile is
committed to further positive action.
Progress on climate change initiatives
in Chile has been especially significant
recently, and unique in the region. We
have successfully established a permanent
national greenhouse gases (GHG)
inventory system, recursively updated
as a result of the committed work of
the ministries and agencies that manage
critical data to support sectoral policies.
We have advanced the implementation
of Nationally Appropriate Mitigation
Actions (NAMAs, as defined by the
Convention). Finally, we have conducted
a national survey to identify public
needs and support – financial resources,
capacity building, technical assistance and
technology transfer – available from the
international community and deployed
in the country in the fight against
climate change.
CARBON TAX PROVISIONS
This article particularly discusses an
important milestone – our recently
enacted carbon tax law, a cornerstone
for mitigation actions in our country.
Our ministry, in close collaboration
with the Ministry of Finance and under
the guidance of President Bachelet, has
introduced a ‘green tax’ as a strong signal
of our commitment to an equitable,
sustainable, resilient and, above all, low
carbon development path.
"Today it is clear that
climate change affects such
aspects as national security,
social development,
competitiveness, job creation
and equity."
The Bill taxes emissions from stationary
atmospheric CO 2
, SO 2
, NO X
and
particulate matter (PM) sources. It
is aimed at facilities with boilers or
turbines that, together, add up to a heat
output of at least 50 megawatts thermal
(MWt). Specifically, Chile’s CO 2
tax
targets large factories and the electricity
sector, covering about 55 per cent of
the nation’s carbon emissions. In my
view, pricing carbon is a crucial element
in any attempt – local or international
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