Chile follows Mexico and wants to tax carbon emissions

Fri Apr 4, 2014 6:54pm GMT

By Marcelo Teixeira

SAO PAULO, April 4 (Reuters) - Chile's government wants to impose a tax on carbon dioxide (CO2) emissions from thermal power plants, the second major economy in Latin America to resort to environmental taxation to discourage the use of carbon-intensive fuels.

On Jan. 1, Mexico imposed a tax on several types of fossil fuels, including gasoline, averaging 3 dollars per tonne of CO2.

According to the proposal presented this week by Chile's President Michelle Bachelet, a center-left politician who returned to the helm of the country on March 11, Chile will charge thermal power generators $5 per tonne of CO2 emitted.

In a similar way as to what happened in Mexico last year, a carbon tax in Chile is part of a broader fiscal reform sought by the government to increase revenues and fund new social policies.

"This measure has the objective to encourage the shift to clean technologies," said the government about the environmental tax in a message sent to Congress this week presenting the reform bill.

The $5 per tonne of CO2 tax will be applied, if approved by the Congress, to thermal power plants with a generation capacity equal or higher than 50 megawatts.

Smaller power units will be exempt.

Bachelet had criticized the heavy use of fossil fuels to generate energy in Chile during her campaign to the presidency.   Continued...

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