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With only 15,8% of energy coming from coal in 2024, Chile is leading the energy transition in developing countries, betting on solar and wind energy to eliminate coal by 2030.
A decade ago, Chile was heavily dependent on coal, with half of its electricity generated from the fossil fuel. But by 2024, that dependence had plummeted to less than 16 percent, cementing the country as one of the fastest-moving developing nations in the energy transition. What explains this leap? A pioneering carbon tax, strong environmental lobbying, and strategic investments in renewable energy.
Chile’s historical dependence on coal
Looking back, the scene was different. In 2014, coal-fired power plants dominated the Chilean energy matrix. Coal was cheap and reliable, but its environmental impact has already worried environmentalists and local communities. Patagonia, in particular, has become a symbol of the fight against the expansion of coal mines and hydroelectric plants.
Fast forward to 2024 and coal-fired electricity generation has fallen to just 15,8%. This reduction was no accident, but the result of meticulous planning and strong actions, such as the first carbon tax in South America.
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Pioneering strategies for reducing coal use
The carbon tax was a game-changer. Introduced to put a price on pollution, it made it economically unviable to maintain coal-fired power plants. New emissions standards also made building coal-fired power plants 30 percent more expensive, pushing the energy sector toward cleaner alternatives.
At the same time, the government and private companies have invested heavily in wind and solar energy. Today, Chile has the most diversified energy matrix in Latin America, with 66,8% of its electricity coming from renewable sources.
The role of renewable energies in the new energy matrix
Among renewables, solar energy stands out: 20,9% of the energy mix is photovoltaic, placing Chile as a global leader in solar integration. The country is also a reference in wind energy, which makes up 12,8% of the matrix.
In the long term, operate solar and wind farms proved to be more economical than maintaining coal plants. Despite temporary subsidies to stabilize electricity prices in 2022, the transition is already beginning to show financial and environmental benefits.
Challenges and costs of the energy transition
Of course, this transformation has not come without its challenges. In 2022, Chile allocated about 1% of its GDP to fossil fuel subsidies, cushioning the impact of the transition on its energy bill. But experts say this strategy was essential to balance the market and maintain public confidence.
Former Chilean Environment Minister Marcelo Mena-Carrasco, the Chilean model is unique because it combines market principles with a clear environmental commitment. According to him, the Chilean experience can be replicated globally, especially in countries with emerging economies.
Chile's energy future
The outlook is promising. Chile plans to close all its coal-fired power plants by 2030, including the most recent ones. It is estimated that by then, between 80% and 90% of electricity will be generated by renewable sources.
This commitment makes Chile a reference not only in South America, but throughout the world, showing that it is possible to unite economic growth, innovation and sustainability. Thus, Chile is not only abandoning coal, but also paving the way for other nations to follow the same path.
