Chile’s Ministry of the Environment has officially recognized the Climate Action Reserve as an eligible external certification program under the country’s carbon tax framework. The resolution validates the Reserve’s methodologies, recognizes its verification bodies, and enables Reserve projects to generate credits that can be used in Chile’s Green Tax Emissions Compensation System, Sistema de Compensación de Emisiones del Impuesto Verde (SCE).

This eligibility approval expands opportunities for carbon removal and reduction projects in Chile, supports cost-containment for businesses in Chile, and reinforces the Reserve’s role as a trusted registry supporting the use of high-quality, credible carbon credits in compliance programs worldwide.

Companies in Chile that emit 25,000 or more metric tonnes of carbon dioxide equivalent, or more than 100 tonnes of particulate matter, into the atmosphere each year are subject to Chile’s carbon tax. Approximately 22 percent of Chile’s greenhouse gas emissions are covered by the tax, which is currently US$5 per tonne, with the government indicating that the carbon price will increase to US$35 per tonne by 2030 and US$80 per tonne by 2040.

Under the framework, regulated entities may use eligible offsets to meet up to 100% of their carbon tax liability. Eligibility is open to projects implemented in Chile that meet applicable credit timing requirements. Offsets can help lower compliance costs for companies, drive private investment into the local low-carbon economy, and help Chile meet its Nationally Determined Contributions (NDCs) by incentivizing domestic reductions and removals.

“We appreciate the trust and confidence the Chilean Ministry of Environment has placed in the Reserve to support its growing carbon market,” said Amy Kessler, Director of Market Development at the Climate Action Reserve. “The Reserve’s high-quality carbon credits have set the standard for regulatory-quality emission reductions and removals in Latin America and beyond, and we look forward to working with Chile to continue strengthening its carbon market.”

The Reserve is nearing adoption of a landfill protocol applicable to Chile, which will provide guidance on how to quantify, monitor, report, and verify GHG emission reductions associated with installing landfill gas collection and destruction systems. Landfills are an increasingly significant source of GHG emissions in Chile. According to Chile’s Fifth Biennial Update Report (2020), emissions from waste disposal have increased by 681% since 1990 and by 12% since 2018, driven by population growth and underscoring the urgent need to improve waste management and reduce its climate impact.

Looking ahead, the Reserve will be considering other priority sectors for Chile, including agriculture, methane, and forestry, with input from discussions with the Ministry of Environment and local stakeholders. The Reserve is also innovating its protocol development process and structure to enable more efficient inclusion of new jurisdictions under sector-based protocols. Additional information will be shared in the coming weeks on this approach, including how jurisdictions such as Chile can be incorporated and how projects globally may be listed under this updated framework.