CHILE ENERGY POLICY REVIEW 2009

Since 1990, Chile has been the fastest growing economy in Latin America thanks to sound economic management and integration into the global economy. Chile can also be proud of its energy policy achievements. The pioneering privatisation and liberalisation of its electricity sector in the 1980s was the foundation for a competitive energy sector, which has sustained the rapid growth of the Chilean economy over the past two decades.

Nonetheless, Chile faces the continuing challenge of finding additional energy supplies to fuel economic growth. Chile has limited fossil energy resources and depends on imports to meet three-quarters of its energy needs. The country's electricity sector has faced three periods of significant stress over the past decade. The last episode took place in 2007/2008, when the loss of natural gas imports from Argentina was further exacerbated by a drought in the central system, where hydropower normally accounts for over half of electricity generation.

Drawing on the experience of IEA member countries, the Review assesses Chile's major energy challenges and provides recommendations. Six main themes emerge: the successful liberalisation of the power sector in the 1980s; the essential role played by the state in ensuring energy security; the re- formulation of Chile's long-term energy policy; the proposed reorganisation of the institutional framework; greater independence for the system operators; and the need for a clear framework of regulation so that long-term investment decisions integrate social and environmental costs.

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Foreword Organisation of the Review and Acknowledgements Executive Summary and Key Recommendations

1. General Energy Policy

2. Security of Energy Supply

3. Energy and Environment

4. Energy Efficiency

5. Fossil Fuels

6. Electricity

7. Renewables

8. Biomass

9. Access to Energy in Rural Areas

10. Transport

11. Energy Research and Development

Annexes I. Energy Balances and Key Statistical Data II. International Energy Agency "Shared Goals" III. Abbreviations and Units IV. Bibliography