SAO PAULO, Sept 26 President Michelle Bachelet
of Chile enacted new environmental tax legislation on Friday
making the country the first in South America to tax carbon
dioxide (CO2) emissions.
Part of a broad tax reform, Chile's carbon tax will target
the power sector, particularly generators operating thermal
plants with installed capacity equal or larger than 50 megawatts
These installations will be charged $5 per tonne of carbon
dioxide (CO2) released. Thermal plants fueled by biomass and
smaller installations will be exempt.
The new tax is meant to force power producers to gradually
move to cleaner sources to help reduce the country's greenhouse
gas emissions and meet its voluntary target of cutting these
gases 20 percent from 2007 levels by 2020.
Earlier this year, Mexico imposed a tax on the sale of
several fossil fuels, based on their carbon content, averaging
$3 per tonne of CO2.
In Mexico, companies are able to use carbon credits to
reduce their tax bills, a provision not considered in Chile.
Central-American country Costa Rica also has an
environmental tax, but it targets gasoline sales.
Around 80 percent of Chile's energy is based on fossil
fuels, mostly imported oil and coal.
Chile's government will start measuring carbon dioxide
emissions from thermal power plants in 2017 and the new tax
would be charged from 2018.
Four companies are expected to pay the bulk of the new tax:
Endesa, AES Gener, Colbún and E.CL.
The companies have said that the tax will raise the price of
electricity. They have also complained that other industrial
sectors were not targeted.
The government said it expects to collect about $160 million
from the carbon tax, a relatively small share of the forecast
$8.3 billion in additional revenue the broader tax reform will
(Reporting by Marcelo Teixeira. Editing by Andre Grenon)