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How Chile is becoming a leader in renewable energy

Solar panels pictured in Chile's Atacama Desert are crucial to the country's green hydrogen industry.

Solar panels pictured in Chile's Atacama Desert are crucial to the country's green hydrogen industry. Image:  REUTERS/Fabian Andres Cambero

Timothy Conley
Digital Engagement Specialist, World Economic Forum Geneva
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  • Chile has set an ambitious goal of converting 70% of its total energy consumption to renewables by 2030 and pledged to become carbon neutral by 2050.
  • The country’s energy transition strategy has evolved in recent years due to a combination of broad-based political support and innovative green technologies.
  • Its renewable energy strategy could serve as a playbook for industrialised countries in Latin America and abroad.

As the effects of climate change become more apparent, countries around the world are facing a similar dilemma – how to reduce carbon emissions without causing economic damage? For many developed countries, there is risk associated with replacing power grids, shaking up consumption habits and decarbonising supply chains.

Chile, a high-income industrialised economy with 19.6 million people, could offer policymakers around the world a playbook for transitioning towards renewable energy.

Despite its historic ties to fossil fuels and copper mining, Chile in recent years has accelerated its energy transition through broad-based political support, private-public partnerships and innovative green technologies. It has set an ambitious goal of converting 70% of its total energy consumption to renewables by 2030 and pledged to become carbon neutral by 2050. The country is also now leveraging its renewable energy leadership abroad and using it address gender inequalities at home.

Here's how Chile was able to transform its energy policy and accelerate its renewable transition:

Chile's political buy-in

Chile’s clean energy transition has been broadly supported by parties from across the political spectrum and backed by the public. 91% of Chileans believe that climate change should be treated as a government priority, according to the Yale Program for Climate Change Communication. Last December, Chile’s centre-right government published the country’s first energy transition strategy, which provided targets for achieving net-zero emissions by 2050, including accelerating solar, wind and geothermal energy across the country.

Since assuming office, President Gabriel Boric, leader of the left-wing Social Convergence party, has expanded upon the energy transition strategy of his conservative predecessor, Sebastián Piñera. Most notably, the Boric administration announced its intentions to use the proceeds from Chile’s cooper production and lithium to fund production of green hydrogen. During last year’s constitutional referendum, the government proposed expanding environmental rights and introducing mining and natural resource bans. While the reformed constitution was largely rejected by Chilean voters, some viewed it as a sign of the country’s progressive support for the renewable energy transition.

“Chile has huge renewables resources and thus is positioned to lead,” explains David Victor, Professor of Innovation and Public Policy at the University of California, San Diego School of Global Policy and Strategy. “They have built a lot and there is a growing industry, which explains why renewable has durable political support. Real companies have emerged and have a stake in (the) success (of the industry)."

Leverage public-private partnerships

Public-private partnerships have been key in accelerating Chile’s energy transition, especially when it comes to the country’s green hydrogen market. Green hydrogen, a clean energy source that splits water into hydrogen and oxygen using renewable electricity, sits at the heart of Chile’s energy transition. Chile’s National Green Hydrogen Strategy calls for incorporating green hydrogen into the country’s mining and commodity sectors, as well as other carbon-reliant local supply chains.

Wind turbines play a critical role in accelerating Chile's National Hydrogen Plan.
Wind turbines play a critical role in accelerating Chile's National Hydrogen Plan. Image: REUTERS/Víctor Ruiz Caballero

The strategy estimates that Chilean green hydrogen could be among the most affordable in the world due to its favourable renewable energy environment. The country benefits from consistently strong winds in mountainous region of Patagonia and some of the world’s highest levels of solar radiation in the Atacama Desert. This predictable supply of wind and solar energy has led the Chilean government to estimate that 13% of the world’s green hydrogen will be produced within its borders.

Chile’s government has already pledged $50 million in funding to six projects aimed at advancing the national green hydrogen industry. In April, the Chilean development office signed additional funding agreements with GNL Quintero, CAP and Air Liquide for their green hydrogen initiatives.

Establish friendships abroad

Chile is leveraging its progressive renewable energy credentials to establish itself as an important diplomatic player in international climate negotiations. Chile cohosted the United Nations Climate Change Conference COP25 in Madrid, hosted the Clean Energy Ministerial and launched the “Americas for the Protection of the Ocean” coalition at the 9th Summit of the Americas in June 2022.

It has also strengthened bilateral and regional partnerships to advance green technologies and reduce carbon emissions. One of Chile’s most active renewable energy partnerships is with Germany. Under the Energy Partnership Chile-Germany, both countries share knowledge, organise training sessions and host facilitate renewable energy agreements between business leaders and policymakers. The partnership most recently organised a trip for Chilean businesses and government officials to tour a green hydrogen storage facility in Düsseldorf, Germany.

Carolina Schmidt, Chile's Minister of Environment and new President of the 2019 U.N. Climate Change Conference (COP25), Patricia Espinosa, Executive Secretary of the UN Framework Convention on Climate Change, World Meteorological Organization (WMO) Secretary-General Petteri Taalas,Tijjani Muhammad-Bande, President of the UN General Assembly, and Spain's Energy and Environment Minister Teresa Ribera attend the opening of the high-level segment of the COP25 in Madrid, Spain, December 10, 2019. REUTERS/Susana Vera
Chile cohosted the 2019 U.N. Climate Change Conference (COP25) in Madrid, Spain. Image: REUTERS/Susana Vera

Chile has also established strong public-private ties with the United States. In a recent visit to Chile, United States Secretary of State Antony Blinken toured an electrical energy facility where American companies and the Chilean government are working together to accelerate renewable energy production. "What’s happening here is an illustration of Chile’s remarkable leadership on renewable energy," said Secretary Blinken. "I think it shows not only what we’re doing today, but the tremendous potential of this partnership to do even more, and to do it in a way that answers the needs of our respective societies – providing energy that we need to fuel our economies and run our homes – but to do it in a way that also helps us deal with the challenge climate change."

Give everyone a seat at the table

The intersection of renewable energy and gender is a very high topic on the political agenda of Chile. In 2018, the Chilean government launched Energía +Mujer (Energy + Woman) to improve diversity and inclusion in the country's male-dominated energy sector. The initiative provides companies with resources to reduce gender discrepancies in the workplace and offers women with mentoring and networking opportunities.

Chile is also receiving support from the Inter-American Development Bank (IBD) to accelerate its use of clean and sustainable energy sources and promote equal pay and gender parity within its renewable energy sector. The $300 million loan "will support key policy moves aimed at bridging the gender gap in a sector where women account for only 23% of the jobs, and boost female participation through public-private guidelines," according to IBD. It also includes targets for decommissioning coal-fired plants and accelerating the country’s 2050 carbon neutral plan.

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May 21, 2024

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