Chile’s new Energy Efficiency Law

​​​​​​​Claudio Undurraga

Prieto Abogados, Santiago

cundurraga@prieto.cl

Camila Kutz

Prieto Abogados, Santiago

ckutz@prieto.cl

Andrea Von Chrismar

Prieto Abogados, Santiago

avonchrismar@prieto.cl

After more than two years of debate, Law No. 21,305, the Chilean Law on Energy Efficiency (CLEE), was published on 13 February 2021. It establishes, among other matters, the following aspects relating to energy efficiency. The new law was passed to establish a National Energy Efficiency Plan, a consumer registry with energy management capacity, the implementation of a management system, and an energy efficiency label and rating report to be issued for buildings.[1] This article gives a brief overview of the new law.

National Energy Efficiency Plan

The Ministry of Energy, in collaboration with the respective sectorial ministries, shall establish a National Energy Efficiency Plan, to be updated every five years.

This Plan will incorporate various subjects, including: residential energy efficiency; minimum standards and labelling of appliances; energy efficiency in buildings and transport, ‘smart cities’, energy efficiency in the productive sectors; as well as education and training programmes to promote the efficient use of energy.

All these measures will undoubtedly have a positive impact and improve the efficient use of energy in homes, commercial activities, public services, and general knowledge on these matters.

The Plan will also establish energy efficiency goals for Consumers with Energy Management Capacity (CCGE, for their Spanish acronym), which goals may be differentiated according to sector, level of energy consumption or other variables to be determined by the Ministry of Energy.

A draft of the Regulation that establishes the procedure for establishing the National Energy Efficiency Plan was part of a public consultation process in early March 2021. According to the CLEE, the first National Energy Efficiency Plan must establish a goal of reducing energy intensity for Chile by at least ten per cent by 2030, taking as a baseline consumption and energy use during 2019.

Registry of Consumers with Energy Management Capacity

Every four years, the Ministry of Energy will establish criteria to determine which companies must provide annual reports of their previous calendar year’s consumption by energy use and their energy intensity (energy consumption over their sales, in the form and deadlines determined by a Regulation issued through the Ministry of Energy). Smaller companies, as determined by Chilean law, are excluded from this decree.

Consequently, all companies which, during the previous calendar year have had a total energy consumption for final use equal to or greater than 50 tera-calories, must report annually to the Ministry of Energy, their consumption by energy use and their energy intensity of the previous calendar year. Based on this information, the Ministry of Energy will prepare an annual list of consumers who will be categorised as Consumers with Energy Management Capacity.

The energy consumption threshold could include more than one company name, since the Law will consider one or more companies as a single CCGE, when conditions such as brand identity and the similarity or necessary complementarity of the processes, products, or services that they produce or provide concur.

A draft of the Regulation establishing the criteria determining which companies this applies to, and the procedure they must follow to report their consumption by energy use and their energy intensity to the authority, was part of a public consultation process during April 2021.

Obligations for CCGEs to implement Energy Management Systems

The companies that are included in the list of CCGEs prepared by the Ministry of Energy must implement an Energy Management System (EMS).

Each year, CCGEs must send information on the opportunities identified and energy efficiency actions carried out and planned to the Ministry of Energy and the Superintendence of Electricity and Fuels (SEC, for its Spanish acronym), together with the report of their energy consumption for final use. The information must also indicate the ways in which the CCGEs comply with the obligations to implement one or more EMS, covering at least 80 per cent of their total energy consumption.

CCGEs must therefore establish objectives, goals, action plans, and energy performance indicators, among other facets, according to the requirements, terms and form which are outlined in the Plan and other Regulations issued in relation to the CLEE.

Consequently, this productive sector is expected to partake in efficient energy management in the near future. This would establish differentiated goals, for example, according to levels of economic activity, energy consumption or other variables determined by the Ministry of Energy.

According to the CLEE, the first National Energy Efficiency Plan must consider a goal for CCGEs which consists of reducing their energy intensity by an average of at least four per cent.

Energy rating of buildings

The CLEE also states that an energy efficiency label and energy rating report is needed to report on the energy efficiency of buildings. Residential, public, commercial, and office buildings must all have an energy rating in order to obtain the final or definitive sign-off by the respective Municipal Works Directorate.

In addition, cases in where the requirement is carried out for a purpose other than requesting the final or definitive municipal sign-off, will be known as an energy pre-qualification. This will fall within the reemit of the corresponding architectural project, whose label and respective report will be temporary and valid until the final energy requirement is carried out by the respective local authority.

This obligation will apply with respect to construction and real estate companies, and the Housing and Urban Services. Which public authority is in charge of housing programmes, pavements, community facilities, subsidies and urban parks and roads depends on the Ministry of Housing and Urbanism.

The qualification report, pre-qualification and the respective energy efficiency label must be included in all project advertising, and is considered basic commercial information, in accordance with Chile’s consumer rights protection regulations.

These measures will complement existing programmes which promoting positive and innovative sustainable solutions, such as the Sustainable Building Certification (CES, for its Spanish acronym) created in 2014. This programme aims to encourage the design and construction of buildings with sustainability criteria, and registers CES-certified buildings in both public and private sector, which use less than half the energy of conventional buildings.

Energy efficiency standards in motorised vehicles

In the transport sector, efficiency standards will be set for new vehicles. The responsibility for complying with these standards will be the importers or representatives for each brand of vehicles marketed in Chile.

The Ministry of Energy and the Ministry of Transport and Telecoms will set energy efficiency standards that will consist of energy performance goals. The CLEE stated that the metric used to define these standards will be the energy yield in kilometres per litter of petrol equivalent. This will encourage a shift towards more efficient vehicles and electric, hybrid and other zero-emission vehicles.

In conclusion, and based on the five aspects mentioned above, the implementing the new Law on Energy Efficiency will be something of a challenge. The Plan and its regulations must ensure that energy efficiency is not seen as a burden by consumers with Energy Management Capacity, construction and real estate companies, appliances providers, public services, and the civil society in general, but rather turn all those stakeholders into key players for a sustainable development, in close collaboration with the Ministry of Energy and the respective sectorial ministries, through the skilful design of regulatory incentives.