New legislation in Chile shows climate leadership

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In 2021, Chile embarked on drafting a new constitution that will have far-reaching implications for transportation and the country’s future as a sustainable economy. Drafters, fully aware that Chile finds itself in a “climate and ecological emergency,” are weaving sustainability values throughout the new constitution, for example by including provisions on mining and strategic resources like copper and lithium, both important for electric vehicles. The development of hydrogen, an important input to green transport, will also be addressed. Far from a piecemeal response, Chile seems determined to rewrite its economic and resource rules from the ground up to meet the great sustainability challenges of our day. Nations, take note.

Indeed, the country’s commitment to a clean future is clear in a torrent of recent commitments related to sustainable transport. At the COP26 climate meeting in November 2021, Chile signed, along with fourteen other countries, a global memorandum of understanding stating that 100% of heavy vehicle sales will be zero-emission by 2045. Meanwhile, at home, the National Assembly has pushed progressive legislation that sets new mobility targets and creates initiatives on city buses, energy efficiency, and a renewable energy-powered electricity grid. Consider, for example, the National Electromobility Strategy, formalized through legislation by the Ministry of Energy. It establishes strategies, policies, and goals designed to accelerate the sustainable development of electric transport. In this context, Chile has ambitious goals: by 2035, 100% of most vehicle sales will be zero-emission. Light-duty vehicles (gross weight < 2700 kg), medium-duty vehicles (2700 ≤ gross weight < 3860 kg), and urban public transport (buses and taxis) will all be zero-emission. For freight trucks (gross weight ≥ 3860 kg) and intercity buses, 100% of sales are expected to be zero-emission by 2045.

Seldom mentioned in discussions of targets for clean vehicles, but providing clear evidence of the country’s climate commitment, are sustainability goals for the energy-intensive industrial and mining sectors. Zero-emission sales targets are now established for all large off-road machinery (power > 560 kW) by 2035, and for small off-road machinery (power > 19 kW) by 2040. By not exempting or overlooking mining and industry—economic powerhouses that together consume 38% of the nation’s energy—Chile is demonstrating its seriousness in meeting its climate responsibilities.

New urban transit bus fleets

The goal of having all new public transport buses be zero-emission by 2035 is important on several levels. While emissions from diesel city buses create serious climate pollution, they also increase the incidence of cardiovascular and respiratory disease, leading to higher health costs for the state. Zero-emission buses represent an immediate solution to both challenges. And as the municipality of Santiago has discovered, they can be addressed in ways that are affordable for cities in emerging economies.

At the end of 2021, the Metropolitan Public Transport Directorate (DTPM) finalized an order for 991 electric buses for deployment in Santiago, the largest single acquisition of electric buses in the country. When delivered, the city’s public bus fleet will have roughly 1,770 electric buses, raising the share of zero-emission vehicles in the fleet from zero to 25% in just five years. For this recent tender, DTPM provided non-tax incentives for the bus operator and supplier to choose zero-emission over internal combustion vehicles. If operators choose more than 50% of buses as electric during the bidding process, they are awarded a seven-year contract, renewable to fourteen years, instead of the traditional five-year contract, renewable to ten. Moreover, the evaluation criteria for the bus supply tender include a score for energy efficiency, specifying that electric buses can be between three and four times more efficient than diesel buses. An important lesson for cash-strapped governments seeking to learn from the Chilean experience: DTPM did not grant new direct financial subsidies for electric buses, reasoning that their total cost of ownership is already lower than that of diesel buses, and therefore that the high procurement costs could be covered using annual savings in operational expenses.

Based on Santiago’s success, and in hopes of replicating this experience throughout the country, the government announced plans to promote the acquisition of electric buses for regions outside the capital. This will be done through developing urban transit “electric corridors” projects in Rancagua, Antofagasta, Concepción, Temuco, Valparaíso, and Puerto Montt, some of the largest cities outside the Metropolitan Region of Santiago. In time, this initiative could eventually expand across the country.

The original DTPM process in Santiago had the technical support of the ZEBRA alliance, led by ICCT and C40 Cities, and supported by the Mario Molina Center of Chile. ZEBRA also secured commitments from more than a dozen financial and industry partners to ensure the commercial availability of zero-emission buses and the financing of projects in Latin American cities. As Chile continues to transition its entire bus fleet, future tenders should be even more competitive and attractive to investors. The ZEBRA model, along with lessons learned (and yet to be learned) is expected to be adaptable or replicable in other Latin American countries both for buses and for other vehicle segments.

Energy efficiency targets

While the transition to zero-emission technologies is critically important, traditional internal combustion vehicles require sustained attention as well, as many will continue to enter the circulating fleet until 2035, 2040, or 2045 (depending on vehicle class), and will continue to operate and produce emissions until they reach the end of their useful lives. To minimize the impacts of these vehicles, the National Energy Efficiency Plan 2022–2026 was created. From this, the Energy Efficiency Law was born in February 2021. It demands efficiency standards for all new vehicles and will activate, among others, the first heavy-duty vehicle standard in Latin America.

To meet these new vehicle efficiency goals, importers or representatives of each vehicle brand marketed in Chile will have to meet new energy efficiency standards starting in 2024 for light-duty vehicles, 2026 for medium-duty vehicles, and 2028 for heavy-duty vehicles. For light vehicles, there will be a progression of standards (see Table 1) in which government and industry work together to (1) double the performance of new light vehicles entering the country by 2035 and (2) quadruple their performance by 2050, with both of these goals starting from a 2019 baseline. Specific standards for medium- and heavy-duty vehicles are slated to be set soon.

Table 1.  Progression of energy efficiency standards for light vehicles in Chile

A clean energy grid

Of course, to maximize the benefits of zero-emission vehicles, the electricity used needs to be clean. Chile is working on this, too. Through the Just Transition Strategy for energy, there will be an Energy Transition Law seeking to transition the country to sustainable energy generation. This will spotlight renewable energy, particularly solar, wind, biomass, and hydrogen. The law will give particular emphasis to green hydrogen, which is produced from renewables rather than fossil fuels.

The discovery of green hydrogen opportunities is promising for Chile. Throughout its history, for better or worse, Chile’s status as a leading producer of copper—it provides 28% of the world’s supply—has chained the government to the copper industry. Chile has now discovered that it has a different “mine,” one that better aligns with the global energy transition and emission reduction goals. With the promotion of green hydrogen for a clean energy grid, hydrogen could be, according to several sources in the media (bnamericas, CIPER, Sustainable Report), the “new copper” of Chile. According to the National Green Hydrogen Strategy, an estimated $5 billion will be invested in renewables, including green hydrogen, by 2025. By 2030, Chile is expected to be a leading global producer and exporter of green hydrogen. This is a breakthrough in terms of energy security, among other things, as Chile currently imports 95% of its domestic oil supply.

Chile’s climate leadership is great for Chileans, but it also sets a good example for other countries. Chile is still classified as an emerging economy, yet it has very progressive public policies in the transport sector. Now it becomes an example for Latin America and for developing countries worldwide. For governments with similar economies, Chile is clearly showing the way forward.

Table 2.  Official legislation that includes goals towards clean transportation and is mentioned in this article, 2020–2022

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