Chile may impose a CO2 emissions tax on power plants.
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Set to be the second major economy in Latin America to resort to environmental taxation to discourage the use of carbon-intensive fuels, Chile’s government wants to impose a tax on carbon dioxide (CO2) emissions from thermal power plants. The proposal for a carbon tax was presented this week by Chile’s President Michelle Bachelet, and stated that Chile will charge thermal power generators $5 per ton of CO2 emitted.

On January 1st, Mexico imposed a tax on several types of fossil fuels, including gasoline, averaging 3 dollars per ton of CO2. Similar to Mexico, a carbon tax in Chile is part of a broader fiscal reform sought by the government to increase revenues and fund new social policies.

“This measure has the objective to encourage the shift to clean technologies,” said the government about the environmental tax in a message sent to Congress this week presenting the reform bill. Around 80 percent of Chile’s energy is based on fossil fuels, mostly imported oil and coal. The country has a voluntary target to reduce greenhouse gas emissions 20 percent by 2020, from 2007 levels.

The new tax also targets other chemicals such as nitrogen oxide and sulfur dioxide. There will also be an extra levy to imports of diesel-fueled vehicles.