We invite you to read the publication of El Mercurio in which our Director of the Energy and Infrastructure group, Federico Rodriguez, commented on how to resume the pace towards the energy transition in Chile.
The World Economic Forum warned that globally, momentum has slowed and the goal still looks a long way off, so it is proposing actions to regain the speed needed to reach net zero emissions by 2050.
‘Where the marathon starts is after 30 kilometers,’ said Eliud Kipchoge, perhaps the greatest marathon runner in history, stressing the importance of preparation and planning when approaching the race. ‘That’s where you feel pain throughout your body. The muscles are super sore, and only the most prepared and well-organized athlete is going to do well after that.’
‘By the same token, the energy transition is a marathon, not a sprint,’ stresses the World Economic Forum (WEF) in a paper that accounts for the slowdown in this process: ‘It’s been many years since we left the start. But as we approach the halfway point, the finish line is still a long way off. Momentum has slowed, and progress in the overall Energy Transition Index (ETI) score between 2021 and 2024 was almost four times lower than between 2018 and 2021,’ he warns.
The ETI, which assesses the difficulty of achieving a balanced transition between sustainability, equity and security, showed that only 21 out of 120 countries made progress in those three dimensions in the last year.
At the local level, however, Chile entered the top 20 of the ranking. Rodrigo Arriagada, senior researcher at Clapes UC, explains that the country stands out for its ‘increase in renewable energy (RE) capacity. As of December 2022, the National Electric System had an installed capacity of 33,218 MW, where 62% corresponds to renewable sources’.
At the global level, the WEF concludes that, apart from an increased adoption of wind and solar energy, the necessary trajectory to reach net zero emissions by 2050 has not been followed. In fact, clean energy investments reached a record US$1.8 trillion in 2023, but this figure is about one-third of the level required to 2030 to achieve that goal. ‘Energy security is tested against a backdrop of rising geopolitical tensions. Energy equity issues persist within and between countries, especially in terms of affordability and access,’ it details.
Against this backdrop, the document – prepared in conjunction with Accenture – proposes five lines of action to ‘regain crucial momentum and ensure a strong pace in the second half of the race’. All of them are being addressed in Chile, to a greater or lesser extent.
Framework for promotion
The first is to ‘prioritize regulations that encourage decarbonization and efficiency’. ‘Push-pull (stimulus and control) initiatives can reduce the energy and carbon intensity of economic growth by accelerating innovation in clean energy,’ says the WEF.
For example, the US Inflation Reduction Act (IRA) offers a 26% tax credit for solar energy investments, within a total fund of US$ 369 billion for transition incentives. The UK grants Contracts for Difference (CfD), which provide long-term price stability to attract RE investments.
In Chile, Federico Rodriguez, director of Energy and Infrastructure at Albagli Zaliasnik Abogados, estimates that the energy transition has been restricted on the transmission and distribution side , due to the lack of infrastructure to bring all the energy to consumption centers. ‘In the first half of the year alone, around 2,300 GWH were ‘lost’, equivalent to the output of a 500 MW solar power plant,’ he says.
Rodriguez believes that the means of storage should be promoted and clear signals of security and continuity of supply should be given, as well as continuing to promote Small Means of Distributed Generation (PMGD), which bring generation closer to the centers of consumption. However, he criticizes that the stabilized system of prices of the PMGD is currently being reviewed: ‘The current government, without thinking that this is a long-term career, wants to change this regime, taking part of the income of the PMGD to subsidize the prices of energy‘, he says.
The Ministry of Energy emphasizes that in the coming years ‘green markets will materialize more explicitly, introducing internalization in the same market of the cost associated with the externalities of pollutant and CO2 emitting energy sources’.
For this reason, the Government is moving forward with roadmaps such as the action plans and regulations for the development of the hydrogen industry, published this year, and the updating of the Power Regulation to incorporate storage methods, with a payment for their contribution to the sufficiency of the electricity system.
You can read the full publication at the following link.
