The program will support the country’s strategy to produce green hydrogen by 2030 and promote energy technology innovation efforts.

The Inter-American Development Bank (IDB) has approved a US$50 million loan to support Chile’s policy reforms aimed at speeding up its energy matrix decarbonisation and transition to carbon neutrality.

The program seeks to strengthen the energy sector’s regulatory framework by promoting distribution market regulation improvements, fostering clean energy use by consumers, and encouraging women participation in the sector.    

In order to accelerate the energy matrix decarbonisation process the country plans to gradually retire coal power plants, which in 2019 accounted for 36.7% of energy generation and for 25% of greenhouse gas emissions. Chile’s goal is to reach carbon neutrality by 2050.

The program will also support Chile’s fair energy transition strategy which, besides incorporating equitable social and environmental development components, will boost job creation in the transition to carbon neutrality.

In addition, the project will encourage implementing policies and measures to advance the country’s efforts to promote sustainable development, encourage large-scale adoption of renewables in its energy matrix, and pave the way for their expansion over the long term.

Furthermore, the program will usher in energy technology innovation initiatives. In the area of electromobility, for example, the energy efficiency act plans to make urban public transport fully electric by 2040.

Other goals of the project include enabling and expediting the incorporation of new renewable energy sources and energy vectors such as green hydrogen in the energy matrix. The national green energy strategy will promote the development of this vector and turn the country into a world-class exporter by 2040.

Additionally, the operation will support key policy moves aimed at bridging the gender gap in a sector where women account for only 23% of the jobs, and boost female participation through public-private guidelines.   

This is the first operation in a series of two independent, programmatic policy-based loans. The US$50 million credit will be disbursed over a two-year period. It has a 5.5-year period of grace and an interest rate based on Libor.