Climate Resilience for Energy Transition in Chile

Temperature

From 1961 to 2022, average surface temperatures in Chile increased at a rate of 0.15°C per decade. This rate has accelerated in recent decades from 1981‑2022 to 0.18°C per decade. As a result, Chile had 12 consecutive warmer-than-normal years starting in 2011 and experienced eight of the ten warmest years in Chile’s history in the last two decades. Warming varies across the country, with coastal regions generally warming at a slower rate due to ocean effects while the central valley and Andean regions warmed much faster.

Cooling degree days (CDDs) have increased in Chile. In recent years (2000‑2023), CDDs have increased at a rate of 6.5 CDDs per decade while heating degree days (HDDs) declined over the same period at a rate of 73.9 HDDs. The number of frost days, where temperatures drop below 0°C, declined at a rate of 3.59 days per decade in the period from 1951 to 2020, leading to increased melting of mountain glaciers.

Under all emissions scenarios, the Intergovernmental Panel on Climate Change (IPCC) projects that Chile will experience warming through the end of the century. In a low-emissions scenario (Below 2°C), Chile’s average land surface temperature is projected to increase 1.72°C by mid‑century and to increase 1.78°C by the end of the century compared with pre‑industrial levels (1850‑1900).1 However, in a high-emissions scenario (Above 3°C), Chile is projected to experience 2.2°C of warming by mid‑century and 3.7°C of warming by the end of the century, although this may be lower than the increase in global land surface temperatures.

The IPCC projects that warming over land surface will vary by region. For instance, in a high-emissions scenario (Above 3°C), the IPCC projects the northern region of Arica y Parinacota will warm to 4.98°C above pre‑industrial levels by the end of the century. The southern region of Magallanes y Antarctica Chilena, on the other hand, is projected to warm by only 2.70°C over the same period. Rising temperatures in warmer regions can increase the energy use required for cooling in the industrial, residential and commercial sectors from December to March during the Chilean summer.

Chile’s energy system is likely to observe a shift in peak electricity demand due to the changes in climate and demand patterns. Rising temperatures would decrease the peak electricity demand during winter by reducing the need for heating, while increasing peak electricity demand in summer with the proliferation of cooling technologies. Energy efficiency measures could help level demand peaks and build resilience against the seasonal shift in demand patterns.

Precipitation

Since 1961, precipitation in Chile has declined at an overall rate of 26 mm per decade, though changes have varied by region. The decrease was more notable in the southern and central zones of the country, which had recorded a wetter climate than the north. In southern and central areas, precipitation has decreased between 4% and 16% per decade. In contrast, dry regions in the north, some of which receive less than 70 mm per year of precipitation, showed a slight increase. For instance, in the northern region of Antofagasta, it has increased at a rate of 4% per decade. However, the mild increase in precipitation in the north has been insufficient to offset the reduction in the south and central zones.

Along with the decrease in overall precipitation, Chile has been severely affected by droughts. Chile experienced a mega-drought in 2010‑2015 that had drastic consequences for the country’s water resources, with some reservoirs reaching record lows and the area affected by forest fires increasing 70%. Experts attribute about 25% of the precipitation deficit during this drought to climate change.

Precipitation is projected to decline across Chile, although changes will continue to vary across the country. Under a low-emissions scenario (Below 2°C), precipitation is projected to decrease by an average of 6% across the country by the end of the century. Some regions, such as Valparaiso, del O’Higgins and the metropolitan area of Santiago, will experience more than 14% declines in precipitation, while others will experience a less than 4% decline. In the northern desert areas, precipitation will decrease by very little in absolute terms. Under a high-emissions scenario (Above 3°C), Chile will experience an overall 16% decline in precipitation. In five regions, this decline will exceed 30% compared to pre‑industrial levels.

The projected decline in precipitation is likely to have impacts on the energy system of Chile. For instance, hydropower, one of the largest electricity sources in Chile (accounting for 23.2% of electricity generation in 2022), is sensitive to changes in precipitation. A decline in precipitation can reduce the capacity factor of hydropower plants as part of complex hydrological processes that affect streamflow, water availability, glacial melt, run-off and evaporation. As precipitation and run-off decline across the century due to climate change, hydropower generation is likely to be negatively affected. In fact, a majority of hydropower plants are installed in central regions, where a decrease in precipitation is the most notable. In Around 3°C and Above 3°C scenarios, at least 70% of installed hydropower capacity in Chile is projected to be exposed to a moderately or significantly drier climate by the end of the century.

If no additional resilience measures are implemented on time, IEA models project that Chile’s hydropower capacity factor may decline by around 25% until the end of the century under a high-emissions scenario (Above 3°C). Even under a low-emissions scenario (Below 2°C), Chile’s hydropower capacity factor is projected to decline by 14%. The projected decline in hydropower generation may have a broader effect across Chile’s power system, adding strains to other parts of the system. In 2021, for instance, reduced hydropower generation during a drought forced the country to increase its usage of coal and diesel power, the latter of which is typically used only as a backup of last resort. To cope with the projected decrease in hydropower capacity factor, Chile is constructing more hydropower plants (e.g. Espejo de Tarapaca, San Carlos, Los Condores, Frontera) and increasing the wind and solar PV capacities.

Thermal power plants, which account for over 40% of electricity generation in Chile, will also be affected by decreases in precipitation levels. Drought can contribute to water shortages that impact the availability of cooling water for coal and gas power plants. In 2014, for instance, a drought left several natural gas power plants without sufficient cooling water, leading some to curtail generation and others to seek water from private wells in order to continue operations. In 2016, three major gas plants totalling nearly 2 000 MW had to implement new drought preparation plans to prevent future droughts like the one in 2014 from leading to major disruptions. In 2021, power companies Enel Chile and Engie had to revise their revenue projections for the year due, in part, to water shortages. Enel Chile lowered its annual earnings expectations by USD 300 million, and Engie’s profits decreased 55% year-on-year in the first six months of 2021.

If climate change is not mitigated, more than 95% of gas and coal power plants are projected to face a drier climate until the end of the century. Under the Above 3°C scenario, over 40% of gas power plants and a third of coal power plants could experience a moderately or significantly drier climate in 2081‑2100. In order to mitigate and adapt to climate change, Chile intends to phase out all of its coal power plants by 2040. This phase-out process has already begun, with more decommissioning expected by 2025.

Increasing aridity combined with high temperatures can also increase the risk of wildfires. In February 2024, a large wildfire in the central and southern parts of the country killed at least 51 people and led to mass power outages. These power outages contributed to authorities temporarily shutting down the second-largest oil refinery in the country.

In addition to the power sector, critical minerals mining is also exposed to climate change impacts, because copper and lithium extraction processes are generally water-intensive. Chile, which is the largest copper producer in the world and the second-largest lithium producer, is experiencing water stress as precipitation declines. Currently, about 80% of copper output in Chile is produced from mines in water-stressed areas, which are vulnerable to decreasing precipitation and droughts. During severe droughts in 2019, for example, the El Teniente mine, the largest underground copper mine in Chile, implemented water rationing to deal with severe droughts. Lithium production is also involved in some conflicts over water use. Although lithium production in Chile is less water-intensive than copper production and mainly uses brine water, local communities raise concerns about the potential impacts of brine water extraction on local freshwater tables, which are yet to be fully understood. To address the concerns, Chile unveiled a national lithium strategy in 2023 which includes a review of the sustainability of water usage by the lithium industry.

Although Chile is likely to experience a drier climate in the future, some parts of Chile are also exposed to heavy precipitation and floods. Floods can be caused due to high levels of precipitation during the April to September rainy season. Floods and excessive water flow can disrupt the supply of fuels and minerals, while causing physical damage to assets. In 2021, for instance, a flood cut off power to over 14 500 homes in the Ñuble and Los Lagos regions. In 2023, a major flooding across the country left over 23 500 people without power for days, leading to total economic damage of USD 759 million.

Sea level rise

The IPCC projects that sea level rise will continue across Chile’s coastline, though its magnitude will vary. Sea level rise will range from 0.2 m to 0.4 m by the end of the century in a low-emissions scenario (Below 2°C) and from 0.3 m to 0.6 m in a high-emissions scenario (Above 3°C), compared with a baseline period of 1995‑2014. As sea levels around Chile continue to rise, they can erode the coastline and damage coastal infrastructure. According to a Chilean Environment Ministry study, 28 out of 35 beaches have already experienced erosion, with some experiencing more than 1.5 m of shoreline retreat per year. Low-lying areas are particularly vulnerable, as are those cities with rapid urbanisation near the coast. A study commissioned by Chile’s Environment Ministry found that some energy infrastructure (notably two substations, a thermal power plant and eight fossil fuel distribution centres) would be exposed to floods by 2045 due to their low-elevation levels and proximity to the coast. To minimise exposure, proposed adaptation measures in the study include integrated coastal management; green infrastructure, like the conservation of dune or seaweed fields; and the establishment of sand mining quotas.

Power generation assets near Chile’s coastline could be affected by sea level rise. Currently, around 30% total installed capacity of coal-fired power plants and 7% of natural gas-fired power plants are located in low-elevation areas and near coastal areas. Under a high-emissions scenario (Above 3°C), all low-lying coal-fired power plants and over 80% of natural gas-fired power plants are projected to experience 0.4 m to 0.6 m of sea level rise by the end of the 21^st century. This increase in average sea levels can contribute to larger tides and increased coastal flooding intensity, which can damage low-lying power plants.

Oil refining could be also affected by sea level rise. Oil represented nearly 50% of Chile’s total energy supply in 2022, and Chile is the fifth-largest oil refining country in Central and South America, accounting for around 5% of the region’s total oil products refined. Two of Chile’s three oil refineries, representing 50% of the country’s capacity, are in low-lying coastal areas. Sea level rise can erode low-lying areas with refineries, increasing the risk of damage or seawater inundation, and flooding driven by sea level rise along with storms and precipitation changes can exacerbate this damage, particularly to storage tanks. In a high-emissions scenario (Above 3°C), 85% of low-lying refineries would experience 0.4 m to 0.6 m of sea level rise, although the sea level rise could be limited in lower-emissions pathways.

Chile’s 2018 Climate Change Adaptation Plan for the Energy Sector correctly identifies that sea level rise and storm surge can damage port infrastructure, regasification plants, and oil and gas pipelines. It also highlights how sea level rise may disrupt fuel imports if coastal infrastructure is damaged. The improvement of risk management systems and evaluation of climate impacts on energy transportation infrastructure are good initial steps. Physical system hardening, such as improving flood walls, dykes and other coastal barriers, as well as relocation of some assets to higher-elevation areas may further help improve resilience.

Two major policies drive Chile’s mitigation and adaptation actions in the energy sector. Chile’s Framework Law on Climate Change, passed in 2022, enshrines the country’s 2050 net zero emissions target into law and emphasises the importance of building resilience to the impacts of climate change. It starts by supporting broad net zero and resilience goals, and then codifies the Nationally Determined Contribution (NDC) and Long-Term Climate Strategy (LTCS) announcing commitments and setting sub‑goals. It also mandates sectoral mitigation and adaptation plans, including a regularly updated energy sector adaptation plan. Other sector-specific adaptation plans may also have implications for energy, especially those on hydrological resources, mining and infrastructure.

The second major policy that works in conjunction with the Framework Law is Chile’s General Law of Electric Services (LGSE), which has been regularly modified since its initial passage in 1982. Reforms to the law include the right for non‑conventional renewable energy sources to be connected to the grid. More recent reforms prioritise energy storage and provide tax exemptions for electric vehicles. The country’s long-term energy planning mechanism, annual energy forecasting report and reviews of energy sector mitigation measures all fall under the LGSE. These measures in turn provide feedback and results that are used in Chile’s LTCS, sectoral mitigation and adaptation plans, and the National Forecasting System. The continued co‑ordination of instruments under the LGSE and the Framework Law to align objectives and policy support will be crucial to successfully build energy sector resilience.

The LGSE is the overarching framework that guides Chile’s 2050 National Energy Policy, published in 2022, where resilience is a key priority. Preparing for, responding to and adapting to climate change and extreme weather is one of six key pillars of the policy. The policy highlights that Chile is highly vulnerable to climate change, and that this vulnerability threatens the reliability of Chile’s energy sector. It lays out eight goals for resilience, ranging from increasing energy storage to 6 000 MW by 2050 (up from about 70 MW in 2022) to 100% adoption of climate and disaster risk reduction plans by communities and regions by 2030. Regulation, planning and standards in the electricity and fuel sectors must explicitly incorporate adaptation and climate resilience by 2030. Additionally, the National Energy Policy promotes local development and decentralisation of energy supplies, which can increase the resilience and flexibility of the power system. It also seeks to integrate climate change adaptation into the management and development of the energy sector throughout the country. For the implementation of these measures, the policy highlights the role of a technical advisory council that systemically evaluates the security and resilience of the country’s energy system.

Chile’s National Adaptation Plan (NAP) and NDC rely on inputs from the National Energy Policy but fall under the scope of the Framework Law. The energy section of Chile’s National Adaptation Plan focuses on how climate change will decrease the country’s hydropower capacity. It assesses that the hydropower capacity factor of the National Electric System (Sistema Eléctrico Nacional, or SEN) could decrease by 22% by the end of the century under a high-emissions scenario. The NAP also discusses how this decline in hydropower capacity would coincide with increased energy demand in both the industrial and residential sectors, largely due to cooling, which could create stress for the electricity system. To address these challenges, the NAP calls for developing specific lines of action on energy and water resources, improving energy efficiency, and spurring the growth of renewable energy resources, particularly distributed solar generation.

Chile submitted an updated NDC to the United Nations Framework Convention on Climate Change (UNFCCC) in 2020. This NDC falls under the scope of the Framework Law. The NDC prioritises reducing emissions and fostering climate resilience, specifically targeting water management and disaster risk management within the resilience category. The NDC lays out that Chile will begin to update its energy sector-specific adaptation plans in 2023 and 2028.

Chile published its first Climate Change Adaptation Plan for the Energy Sector in 2018. The plan highlights several climate risks to the energy sector, including a decrease of water availability restricting hydropower, increased water temperature reducing the cooling efficiency of thermal power plants, high temperatures leading to transmission losses, extreme weather damaging fuel transport pipelines, and increased electricity demand for cooling. The plan looks at energy supply, demand and transport, examining how each part of the energy system is likely to be affected by climate change. For each power generation technology, the plan qualitatively describes the impacts of temperature, precipitation, river flow, extreme events and other relevant climate variables. The plan recommends 15 adaptation measures focused on better understanding the specific effects of climate change on Chilean energy infrastructure and integrating climate change adaptation into the sector’s planning processes.

As mandated by law, Chile is currently in the process of updating its energy sector mitigation and adaptation plans. The adaptation plan is designed to create a roadmap that guides the energy sector so that it can anticipate, absorb, adapt to and recover from the effects of climate change. The Ministry of Energy runs a five-step process to create these plans: initialising the process, drafting the plans, completing citizen consultation, preparing the final project and financial report, and finalising the sectoral plans. As of May 2024, the Ministry of Energy is working on step two. Step three through five are planned to take an additional 160 days once the draft report is completed. Thanks to the enactment of the Framework Law, the plan is expected to lay out ambitious, actionable sub-goals guided by policy support. These goals will align with Chile’s long-term energy sector resilience goals: by 2025, all energy infrastructure owners know they need to develop resilience plans; by 2030, all owners have carried out climate risk assessments and developed adaptation and resilience plans; by 2040, all owners have implemented their plans and evaluated initial effectiveness; and by 2050, all owners reduce their vulnerability to climate risks and increase their resilience and adaptive capacity.

Guided by the policies described above, Chile’s Ministry of the Environment and Ministry of Energy have prioritised climate resilience. Projects backed by the ministries, in co‑ordination with development partners, have sought to use state-of-the-art modelling technology to examine risks to Chile’s energy system. The Climate Simulations Platform, developed in 2018, uses global, regional and national models to project climate impacts on Chile under low- and high-emissions scenarios. The Climate Risk Atlas programme (Atlas de Riesgos Climáticos, or ARClim), developed in 2019 and 2020, goes even further, looking at climate hazards, vulnerability and exposure at the commune level. It evaluates the level of climate risk in the energy sector in four categories, looking at the impacts of lower hydroelectric generation, higher temperatures on transmission, reduced wind resources and changes in solar radiation. These innovations and other collaborations with Chile’s Climate and Resilience Science Centre (a government-sponsored research centre focused on climate impacts) are highlighted in Chile’s Fourth National Communication to the UNFCCC.

The importance of climate resilience is noted in many of Chile’s other policies, including its Just Transition Strategy for the Energy Sector, its Decarbonisation Plan, and its 2022‑2026 Energy Agenda. Chile’s 2021 Energy Efficiency Law, which seeks to reduce overall energy intensity 10% by 2030, also plays a crucial role in helping improve the country’s climate resilience in the energy sector.

With adoption of the law on the establishment of the national disaster prevention and response system in 2021, Chile has built a preventive approach to disaster risk management, addressing all phases of the risk cycle, including prevention, preparedness, mitigation, response and reconstruction. To better prepare for the risk of disasters, the law mandates the elaboration of sectoral plans for disaster risk management, including for the energy sector. Additionally, the law established Chile’s National Service for Disaster Prevention and Response (SENAPRED), which seeks to build capacity for live event monitoring, co‑ordinating disaster risk reduction strategies, and developing national, regional and local measures to increase resilience. SENAPRED operates under a framework created through Chile’s National Policy for Disaster Risk Reduction, which includes the goal of incorporating disaster risk reduction into sustainable energy strategies. The policy also notes that it is designed to work in line with the 2050 National Energy Policy, particularly on improving security and quality of supply. SENPARED also seeks to further improve the resilience of Chile’s infrastructure, including its energy infrastructure. To increase energy infrastructure resilience in particular, Chile collaborated with the German development agency GIZ through the German-Chile Energy Partnership to study the resilience of energy sector infrastructure to climate change.

Overall, Chile is a leader in prioritising climate resilience in its energy policies. The country’s legal mandates to pursue resilience alongside net zero emissions goals ensure that Chile is ready to adapt to climate change’s impacts while reducing emissions. Chile’s energy sector strategies highlight the need for adaptation while identifying actions to mitigate climate change, such as investing in renewable energy technologies and grid storage. The coherence between energy-related policies sends a strong message that Chile seeks to achieve both goals of climate change mitigation and adaptation. With a long-term view to 2050, the Ministry of Energy, as of May 2024, is about to launch for public consultation its first Climate Crisis Adaptation Strategy for the Energy Sector, which includes six areas of action2 and six cross-cutting approaches,3 while proposing 16 measures with an overall adaptation goal for energy sector resilience, with intermediate milestones to be achieved by 2050.

As Chile looks to continue to strengthen its policy readiness for climate resilience, the country can take several additional steps. Energy planners need to consider climate risks from the initial stage of planning such as siting decisions for new generation assets and electricity networks. Building on tools to enable more tailored assessments of climate risks would be helpful. Because of the geographical variations in climate in Chile, local impacts of climate change need to be taken into consideration in energy planning.

Chile has great potential to build a more resilient energy system by diversifying energy sources. The climate conditions in Chile are projected to be favourable for developing renewable energy sources, such as solar and wind, thanks to the comparatively low number of extreme heat events. Moreover, both renewable technologies are known to be resilient against the projected decline in precipitation and streamflow, which is likely to be a major climate concern in Chile. Policies to support the further deployment of these technologies could help build resilience by enabling geographical and technological diversification of energy sources, which is crucial for climate-resilient energy systems.

Chile can also enhance the implementation of climate resilience policies by continuing to ensure coherence among energy and other relevant policies. The new NDC could provide an overview of all relevant policies and set a roadmap for resilience actions. Chile’s next energy sector adaptation plan could also build the foundation of implementation and establish policy directions. Furthermore, it could align the short-term and long-term goals of the energy plans, while raising awareness of the long-term benefits of climate change adaptation and resilience.