The Arduous Search for Energy Independence in Chile

Photo Credit: Energia.gr[1]

By: Marcela Velez

Chile is the fifth-largest consumer of energy in South America, but it’s only a minor producer of fossil fuels, making the country heavily dependent on energy imports.[2] Chile ranks ninth in the world in terms of energy imports as a percentage of total energy use.[3] In a growing economy like Chile, dependence on foreign energy resources can represent a huge risk to economic development and growth. The main energy challenge for Chile in the coming years will be to increase energy independence in a sustainable and environmentally friendly manner.

With a population of 17 million people, Chile is the sixth largest economy in South America with a GDP of $300 billion dollars. Chile possesses the second highest per-capita GDP in the region, right below Argentina.[4] The country is considered a net energy importer. According to the Ministry of Energy, Chile imports 72% of the energy it consumes. Most of the energy consumption comes from oil, natural gas, and coal and is primarily used by the mining and industrial sector and the transportation sector.[5]

Being a net energy importer jeopardizes the growth of the country’s economy and fosters Chilean dependency upon its neighbors. For example, in 2004 the country faced an energy crisis when Argentina, the largest provider of natural gas, decided to restrict the amount of gas that was being exported to Chile.[6] In addition, border disputes with Bolivia or Peru limit gas imports from these energy-rich countries.[7] The limited gas availability and the rise of oil prices have made Chilean electricity one of the most expensive in the region.

To address the energy situation, a group of stakeholders from academia, the government, the private sector, and NGOs initiated a public debate to develop criteria to evaluate a new energy matrix for Chile based on cost, environmental and social impact, and regulatory changes. Several scenarios were constructed and proposed. To further address the issue, in 2012, the government launched the National Energy Strategy 2012-2030.[8] The development of this National Energy Strategy is a huge step forward for Chile’s energy problems. In the next couple of years the government will be tested on its capacity to implement this comprehensive plan. Some of the pillars in The National Energy Strategy include:[9]

  • Reducing consumption via energy efficiency, providing incentives for energy efficient buildings and energy efficient companies and by developing efficient residential and street lighting systems among others.
  • Increasing the participation of non-conventional and renewables in the energy matrix (current participation is only at 3%) by attracting investors using viability studies and financing incentives.
  • Greater prevalence of water resources as a fundamental component of the energy matrix, promoting participation of local communities and projects that follow environmental regulations.

One of the main criticisms to the plan is the heavy importance placed on hydroelectric energy, in particular with the development of the HidroAysén project. This $3.2 billiondollar project “involves a series of five dams in the sparselypopulated region of Aysén, which is dotted with nature reserves.” [10] The project could have huge environmental risks in the heart of Patagonia region and therefore has called the attention of environmental groups in Chile and worldwide.

Chile has also considered going nuclear, but this idea was quickly discarded by the government after the Fukushima disaster, as Chile is one of the “world’s most earthquake-prone countries”.[11]

Chile’s main challenges for economic development and growth will continue to be how to increase energy independence in a sustainable and environmentally friendly way and especially whether or not the government will be able to implement the proposed National Energy Strategy by 2030. 

 

Marcela is a first-year graduate student in the International Affairs program at the Pennsylvania State University. Marcela was born and raised in Colombia, South America. She received a Baccalaureate Degree in Business from the School of Engineering in Antioquia (Colombia) and a Master of Business Administration (MBA) from the Pennsylvania State University. Marcela’s work experience expands across several industries, including financial services, consulting and education and she is fluent in both English and Spanish.


[1] http://www.energia.gr/photos/ape%20mix%20g.jpg.

[2] “Chile.” EIA. <http://www.eia.gov/countries/country-data.cfm?fips=CI>. March 2013.

[3] “World Bank Indicators.” World Bank, 2011. <http://data.worldbank.org/indicator/EG.IMP.CONS.ZS?order=wbapi_data_value_2011+wbapi_data_value+wbapi_data_value-last&sort=desc>. Wed. 9 Jan. 2013.

[4] “World Fact Book.” CIA. <https://www.cia.gov/library/publications/the-world-factbook/geos/ci.html>. Wed. 9 Jan. 2013.

[5] “Balance Nacional de Energia 2011.” Ministerio de Energia, Santiago de Chile, 2012. http://www.energia.gob.mx/res/PE_y_DT/pub/2012/BNE_2011.pdf.

[6] “Chile.” <http://www.energiaynegocios.com.ar/qeq/pages/chile.html>.

[7] “An Unexpected Setback.” G.L. Santiago. <http://www.economist.com/blogs/americasview/2012/06/energy-chile>. 1 June 2012.

[8] “Escenarios Energeticos Chile, 2030.” AVINA, Empresas Electricas S.A. Fundacion Chile, Universidad Alberto Hurtado. <http://escenariosenergeticos.cl/>.

[9] “National Energy Strategy 2012 – 2030.” Gobierno de Chile, Ministerio de Energia, Febrero, 2012. <http://pds.kallman.com/shows/iftenergy_2012/pdfs/Energy-for-the-Future-Chile’s-National-Energy-Strategy-2012-2030-English.pdf>.

[10] “Chile: Power Project Approved.” Alexei Barrionuevo. <http://www.nytimes.com/2011/05/11/world/americas/11briefs-ART-Chilebrf.html>. 11 May 2011.

[11] “An Unexpected Setback.”

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