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Bicameral: From decarbonization to the Convention’s regulations

We invite you to listen to the latest episode of Bicameral, Azerta's podcast on the main legislative issues both in the Congress and the constitutional process. In this episode, Ian Mackinnon in Chile and Javier Sajuria in the United Kingdom address a very newsy week which ended with the approval of the regulations for the Constitutional Convention no less. They also analyze movement on amending the pension statute and a bill that will prohibit the construction of thermal power plants in the country. Don't miss this latest episode!

29 October 2021

What is up at the Constitutional Convention? It was an intense week for the Constitutional Convention. In the end, however, voting on the rules of procedure and the proposals for internal regulations issued by the Popular Participation, Ethics, and Indigenous Participation and Consultation committees was concluded. The updated schedule means that the committees can begin discussing content during the highly-symbolic week of October 18. It was also agreed that the members would travel on their first “territorial week” outside of Santiago. Ian Mackinnon commented that “… it will be interesting to watch and follow the members during that time.”

Amendment to the Pension Law. The debate around our pension system is ongoing in Congress. One of the bills, a reform proposed by the Executive branch, which broadens and strengthens the pilar solidario (for people who have no savings or limited savings in a private pension plan) of Law No. 20,255 and reduces or eliminates tax exemptions to ensure sufficient funding, underwent key votes first by the Labor Committee, and then by the Treasury Committee where several key changes were made:

  • Among the agreements was that the eligibility age for women to receive the basic solidarity old-age pension benefit was lowered to 60. The measure was approved over the objections of the Executive and some members of the ruling party who argued that this was inadmissible. Their argument: these are tax resources that the parliament has no power to regulate. This point was repeated several times by Minister Patricio Melero.
  • Another change was to the coverage offered by the Pilar Solidario. The Executive proposed increased coverage from 60% to 80% of the vulnerable population but that was increased to 85%.
  • It was also decided that a duly founded resolution would task the Superintendence with setting annual market values and maximum commissions to be paid to the foreign entities entrusted by the AFPs to manage all or part of their Pension Fund resources.
  • In addition, the actuarial tables cannot extend beyond 85 years of age. An indication by the opposition to raise the basic old-age solidarity pension to $210 thousand was also approved.

Renewable Energies in the Senate. The Mining Committee met to begin the second constitutional discussion of the bill prohibiting the construction and operation of coal-fired thermal power plants in the country. “This bulletin 13196-12 comprises a single article and a transitory article to prohibit the construction and operation of coal-fired thermal power plants anywhere in the country,” explains Javier Sajuria from London. The law regulating coal-fired thermal power plants that are less than thirty years old will come into effect on December 31, 2025.

  • Carlos Finat and José Ignacio Escobar, Executive Director and President of the Chilean Association for Renewable Energy and Storage (ACERA), respectively, and Sara Larraín, the director of Chile Sustentable (Sustainable Chile), all presented at the session.
  • The ACERA representatives detailed a study they commissioned to analyze possible scenarios for the retirement of all thermal plants by 2025, which concluded that for the system to meet the demand in 2026 would require the installation of about 8,000 MW above the 10,000 MW already committed to by 2025. In their opinion, the date set in the bill does not allow enough time to implement a system that will be sufficiently adapted to guarantee the required supply.
  • Sara Larraín, for her part, emphasized that between now and 2025 there are only 10 plants (1,675MW installed) that need to be shut down to meet the government’s decarbonization plan. In her opinion this would not cause any major problems as no supply problems are projected in the short term. Larraín, however, was open to the possibility of relaxing the total shutdown by 2025. She said that the government’s negotiation for voluntary decarbonization had been weak, and that more could have been done. She was emphatic in pointing out that the new deadline(s) must be legally stipulated, and though they might require gradual implementation, the timelines should be binding.
  • Senator Guido Girardi is of the view that 2025 is too far in the future. He announced that he is drafting a bill stating that before 2030 there must be no energy generation that is non-renewable. In his opinion, Chile should be a world leader in energy storage and in developing technologies for this purpose. He indicated that green hydrogen is a key area and where the focus should be. Girardi concluded his presentation by saying that the Executive should attend the next session to present any alternative vision.