The Paris Agreement introduced a new way to address climate change by providing a framework for countries to reduce emissions through Nationally Determined Contributions (NDCs). As the risks of climate change mount, the ambition of current NDCs will need to be increased to stay well-below 2°C of warming. This will require innovative financing, markets, and technology to facilitate cost-effective climate change mitigation that is compatible with sustainable development goals.
In a new partnership, the World Bank and Chile’s Ministry of Energy will work to support Chile’s low-emission energy sector goals, provide a replicable framework for generating mitigation outcomes, and demonstrate the important role climate markets will play under Article 6 of the Paris Agreement. Both partners are committed to action through market-based instruments, which can mobilize additional finance to drive low-emission energy activities, thereby supporting the fulfillment of national energy policies and climate targets.
The program will build on the Government of Chile’s ambitious climate action. Chile’s NDC pledges to reduce the country’s emissions per GDP unit by 30% below its 2007 levels by 2030. With the energy sector representing over 78% of national greenhouse gas emissions, initiatives led by the Ministry of Energy on renewable energy and distributed energy, energy efficiency, the retirement or conversion of coal-fired power plants, and e-mobility along with partnerships like this collaboration will help to pave the way for a low carbon future in Chile.
The scope of collaboration between the World Bank and Chile’s Ministry of Energy focuses on three related areas:
1. Development of Mitigation Outcomes: Chile’s Ministry of Energy will select specific projects that can generate mitigation outcomes (MOs) in the energy sector and apply its Partnership for Market Readiness (PMR)-supported measurement, reporting, and verification (MRV) system to them.
2. Climate Warehouse: The selected projects will be recorded in Chile’s national registry and reflected in a “Climate Warehouse,” which will allow the tracking of MOs and provide access to the international market.
3. Piloting Blockchain Technology: Chile will expand its Public Solar Roofs program, initiated under the PMR, which may use blockchain technology to track renewable energy generation and create MOs.
The World Bank and Chile’s Ministry of Energy have established a workplan to coordinate this collaboration. The workplan will be executed between now and COP25, where an announcement on progress and next steps will be made.