Chile’s carbon tax framework witnessed a dramatic increase in offset usage last year, with companies retiring over 4.4 million carbon credits in 2024—marking a sharp rise from just 260,000 tonnes in 2023, which was the policy’s inaugural year.
Landscape view of the lush Valdivian rainforest in southern Chile. AI generated picture.
According to the Ministry of Environment, credits equivalent to more than $22 million in value were used to comply with emissions obligations under the country’s $5 per tonne CO₂ tax. The tax applies to entities emitting over 25,000 tonnes of CO₂ equivalent annually, who may choose to offset emissions through domestic carbon projects instead of paying the tax directly.
‘The results demonstrate the growing interest in this instrument, which generates significant benefits for the country and its inhabitants’, said Maximiliano Proaño, Chile’s Undersecretary of the Environment. He added, ‘The emissions offset system not only allows progress in climate change mitigation, but also promotes a sustainable development model that generates positive impacts on people's quality of life.’
In 2024, nine companies made use of the offset provision. Guacolda Energy, operator of the country’s largest thermoelectric plant, accounted for the lion’s share with more than 2.5 million tonnes of CO₂e offset. Kelar’s combined cycle gas facility followed with 627,368 tonnes, while two sites owned by Engie Chile contributed over 800,000 tonnes combined.
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The credits originated from 10 local projects, most notably the Loma Los Colorados landfill gas initiative, which alone supplied 2.39 million offsets. Other contributors included a mix of wind and hydro power installations and a second landfill gas project.
Eligible offset projects must be based in Chile and registered under standards recognised by the government, including Verra, Gold Standard, the Clean Development Mechanism (CDM), and Colombia-based Biocarbon and Cercarbono.
Despite rising demand, a shortage of affordable credits continues to constrain the scheme. Many eligible units fetch higher prices on the voluntary market, making it cheaper for companies to pay the tax rather than purchase credits.
This imbalance became evident in February, when the first auction under the programme was cancelled due to insufficient supply. ‘People are talking to the government to increase the price, but nothing [is] changing for now’, said an institutional investor familiar with the discussions. ‘The price is too low and they will probably end up with a lot of Cercarbono credits, just like Colombia did in its own carbon tax scheme.’
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Chile’s carbon tax scheme is a clear signal: regulatory and corporate momentum is converging around credible carbon compensation. As large emitters increasingly turn to verified offsets to meet compliance—and supply tightens—the value of trusted, nature-based carbon credits is only set to grow. At DGB Group, we develop large-scale restoration projects that produce high-integrity carbon units designed to meet this rising demand. For forward-thinking investors and businesses, the opportunity is here. Learn how you can be part of the solution—and the growth.
