Overview

Description

The Chile carbon tax is a part of the tax on air emissions from contaminating compounds (impuesto destinado a gravar las emisiones al aire de compuestos contaminantes or ‘impuesto verde’). Chile established a carbon tax in 2014 as part of wider tax reforms to increase taxes for big businesses and lowering them for individuals. The carbon tax went into effect in 2017 and was later updated through amendments in 2020. Following this broader tax reform, which went into effect on January 1, 2023, the carbon tax applies to installations emitting 25,000 tCO2 or more, as well as to those that release more than 100 tons of particulate matter into the air each year. In October 2023, the Ministry of Environment launched an Emissions Offsets System (Sistema de Compensación de Emisiones del Impuesto Verde) to offset emissions under the carbon tax. Implementation started in 2023.

Recent Developments

Not Specified

Coverage

Chile’s carbon tax applies to CO2 emissions from mainly the power and industry sectors. It applies to installations that emit 25,000 tCO2 or more, as well as to those that release more than 100 tons of particulate matter into the air each year. An exemption is provided to biomass energy generation.

Pricing and Allocation Approaches

Set price, no allocation of allowances.

Compliance Approaches

Annual

Relation to Other Compliance CPIs

An emissions Offsets System is in place to offset emissions under the carbon tax.

Covered Sectors

Electricity and heat

Industry

Mining and extractives

Agriculture, forestry and fishing fuel use