Chile has achieved a sustained economic growth and poverty reduction trajectory. Its economy has grown steadily at an annual average rate of 2.6% since 2010. Mining remains the backbone of the economy, with copper and related industries accounting for around 50% of export earnings and 12% of GDP. Diversification efforts have increased exports of agricultural products, wine, forestry goods and seafood, but mining continues to dominate Chile’s economic landscape. While this dependence exposes Chile to global commodity cycles, it also positions the country to benefit from rising demand for critical minerals essential for clean energy technologies.

Chile has remarkable renewable and critical mineral resources; how they are used will shape the country’s future. Chile’s unique geography – stretching over 4 300 km from north to south – gives it exceptional renewable energy potential. The Atacama Desert boasts some of the world’s highest solar irradiance levels, while the Magallanes region offers wind resources that are among the best available anywhere. Chile ranks among the top global producers of critical minerals with around one-fifth of lithium supply, almost one-quarter of copper, and is the second-largest producer of molybdenum. These mineral resources, combined with world-class solar and wind, mean that Chile is well placed to play a key part in multiple supply chains.

Chile has already made significant strides in its energy transition. The share of low-emissions sources in total energy demand increased from 24% in 2010 to 38% in 2024, due in large part to coal power plant retirements and rapid deployment of solar PV and wind, which now provide over 34% of electricity generation. However, the economy continues to rely heavily on fossil fuels; Chile spent USD 14 billion on fossil fuel imports in 2024.

At the request of the Government of Chile, the International Energy Agency (IEA) prepared this report to set out a roadmap for the energy sector as part of the completion of Chile’s net zero emission goal by 2050. It has been produced in close collaboration with the Ministry of Energy and is designed to serve as an input to the forthcoming elaboration of Chile’s Long-Term Energy Planning (PELP 2028-2032). This report builds on the modelling and analytical strengths of the IEA to assess what is needed to reduce energy-related emissions to reach net zero emission by 2050. It is based on the Announced Pledges Scenario (APS), in which Chile and all other countries meet their announced long-term net zero emissions targets.

The energy sector accounts for three-quarters of total greenhouse gas emissions in Chile. Energy-related CO₂ emissions peaked in 2019 at 94 Mt and have since fallen by more than 20% to 72 Mt in 2024. Chile’s Framework Law on Climate Change (2022) enshrines a legally binding target of carbon neutrality by 2050, and is reinforced by its updated Nationally Determined Contribution.

Meeting rising demand for energy services while supplying goods and services to global markets, cutting emissions and improving energy system resilience is a formidable challenge for Chile but requires substantial investment across the energy system. Success depends on four pillars: improving energy efficiency, decarbonising electricity generation, electrifying end-uses and developing resilient grids.

Energy efficiency is one of the most cost-effective levers for emissions reduction. In the APS, final energy intensity declines by 20% by 2035 and 45% by 2050. Material efficiency in industry, fuel economy in transport, and effective efficiency standards for building envelopes and appliances save households money and help to cut fossil fuel imports from USD 14 billion in 2024 to USD 10 billion in 2035 and USD 3 billion by 2050. Annual investment for end-uses sectors rises to over USD 3 billion – seven-times the 2015-2024 average – with the majority directed towards energy efficiency and electrification, particularly for transport.

The power sector is at the heart of decarbonisation plans. Renewables already account for close to 70% of electricity generation in Chile. In the APS, the renewables share rises rapidly, and more than 95% of electricity is generated from low-emissions sources by 2035. Solar PV and wind account for most new capacity additions, supported by storage and flexible resources to ensure reliability. The emissions intensity of electricity generation falls from 189 g CO₂/kWh today to just 29 g CO₂/kWh by 2035. This transformation is based on a rise in annual power sector investment from USD 3.5 billion in 2024 to USD 8 billion by 2035.

Electrification of transport, mining and heating is essential to cut emissions and improve air quality. In the APS, the share of electricity in total final consumption grows from 23% today to 55% in 2050, translating into an additional 80 TWh by 2050. Transport currently accounts for 60% of oil consumption in Chile. This changes in the APS, which sees electric vehicle (EV) sales reach nearly 100% by 2035 in line with the National Electromobility Strategy. In industry, mining companies are replacing mobile mining equipment with electric and hydrogen alternatives. For instance, the Escondida mine – the world’s top producing copper mine – aims to fully replace its truck fleet with electric alternatives by 2033. In the buildings sector, energy demand for space heating more than halves by 2050 in the APS as heat pumps and better insulation become widespread.

Modern, resilient grids are the backbone of the transition. In the APS, grid length expands 40% by 2035 and more than triples by 2050, reaching 700 000 km, while increased digitalisation, automation and storage support the integration of variable renewables. Achieving this requires substantial investment; total average annual investment up to 2035 in electricity grids is projected to exceed USD 1 billion, which is double recent levels.

Building resilience into electricity systems is essential as climate risks intensify. Around 30% of Chile’s grid is in areas prone to wildfires at least every ten years, and prolonged droughts threaten hydropower output. Adaptive measures – such as undergrounding lines, vegetation management and deploying advanced grid technologies – can reduce outage risks. Investment in resilience means upfront costs, but lowers recovery expenses and improves system reliability.

Affordable energy transition is within reach. In the APS, total electricity system costs per unit fall by 15% between 2024 and 2035, even as power sector investment scales up. Household energy bills decline by more than 50% by 2050 compared to today, thanks to electrification and efficiency gains. Despite these savings, the high upfront costs of some clean energy technologies remain a barrier for adoption, especially to low-income households. Further policies and incentives, such as measures to reduce financing costs, are required to make these technologies more affordable and accessible.

Transition improves air quality. Air pollution is one of Chile’s most pressing environmental and public health challenges, and is responsible for about 5 000 premature deaths each year, more than double the number of deaths from road traffic fatalities. Around half of households in Chile with heating needs use bioenergy, which accounts for more than three-quarters of residential heating demand. By 2050, bioenergy consumption for residential heating falls by 65% in the APS, thanks to more efficient use of bioenergy and a significant rise in electric heating, and this helps to reduce fine particular matter emissions and related premature deaths from air pollution.

A sustainable transition depends on ensuring that water needs are met. Desalination is increasingly being used to meet industrial and household water requirements, especially in the north of Chile, where copper and lithium deposits are concentrated. Changes in the climate and rising water needs mean that desalination capacity is expected to increase 2.5-fold by 2035. Reverse osmosis and other membrane-based electrified desalination technologies are up to ten-times more efficient than other technologies.

Chile’s robust planning makes it a model for other economies seeking to reduce emissions. Its just transition plans aim to deliver ambitious climate goals alongside economic growth, and they incorporate policy design, market frameworks and stakeholder engagement. A comprehensive Just Energy Transition Strategy in Chile underpins its coal phase-out policy with the goal of minimising its socioeconomic impact on the communities that currently have coal power plants and ports that handle coal.

By 2040, the total value of Chile's critical minerals production could exceed USD 100 billion, amounting to one-fifth of the global total. Chile is the world’s largest copper producer and among the largest lithium producers. Copper is essential for electricity grids, renewable energy systems and EVs, while lithium is a key component in batteries that power EVs and store renewable energy. Together, these minerals are fundamental to multiple parts of the global economy. In the APS, global copper demand rises 30% by 2035 and 50% by 2050, while lithium demand increases fourfold and sevenfold respectively. Without the addition of new projects beyond those already planned, copper production in Chile could peak and lithium output could plateau early in the 2030s. Despite this, Chile is set to remain a key long-term producer of copper and lithium in a world of rapidly rising demand.

There are opportunities for Chile to support technological innovation to enhance its role in the critical minerals supply chain. The National Lithium Strategy aims to move the country up the value chain and establish domestic refining and battery manufacturing. There are potential synergies between copper and lithium mining output in Chile and mining projects elsewhere in Latin America, given that the manufacturing process for many key energy technologies requires more than one critical mineral. These synergies could boost regional shared value creation.

Chile’s exceptional renewable resources mean that it is well placed to become a competitive supplier of low-emissions hydrogen. There is scope for low-emissions hydrogen to play a key role in decarbonising shipping, aviation and heavy industry globally by providing a clean alternative to fossil fuels in sectors that are difficult to electrify. Making use of both Chile’s biogenic CO2 resources and low-emissions hydrogen potential could enable it to become a competitive supplier of synthetic fuels. In the APS, electrolytic hydrogen generates USD 6 billion in export revenues for Chile by 2035 and USD 13 billion by 2050.

Developing domestic low-emissions hydrogen demand would help scale up its production and facilitate exports. Most announced low-emissions hydrogen projects in Chile have been shaped by expectations of future export opportunities amid limited domestic demand. Increased hydrogen deployment in Chile would help to underpin production and facilitate exports. There is scope for hydrogen to be used in Chile for methanol production, oil refining, transport, and heavy trucks and mobile equipment used in mining. In addition to existing industries, hydrogen could be used to stimulate local production of ammonia for fertiliser and mining explosives, reducing the need to import ammonia and its derivatives. In the APS, electrolytically produced ammonia in Chile is competitive with conventional technologies by 2035 in some regions of the country.

The transition modelled in the APS for Chile sets out a pathway, not the only pathway, to cut energy-related emissions in support of achieving its net zero emissions goal. In the APS, energy-related emissions fall from 72 Mt CO2 in 2024 to 51 Mt CO2 in 2035 and 16 Mt CO2 in 2050. This represents a major contribution to its goal of net zero emissions by 2050, though it means that achieving net zero emissions overall by 2050 depends on offsets outside the energy sector, aligned with Chile’s projected reduction in greenhouse gas emissions to achieve the carbon neutrality goal in the Framework Law on Climate Change.

Continued refinement of long-term energy plans, timely execution of grid and renewables projects, and bold measures to mobilise investment are crucial for success. The choices made will determine whether Chile is on course to achieve net zero emissions while boosting exports and reducing energy costs over time.