Virtual Pilot Case Study: How Article 6 Can Support Energy Sector Transportation

As showcased in the Nordic Pavilion at COP25 in Madrid, the Swedish Energy Agency and Chile’s Ministry of Energy have worked together to advance an example of a high integrity Article 6 cooperation. With support from CCAP, the virtual pilot is designed to promote higher ambition by both countries in meeting and exceeding their Nationally Determined Contributions (NDCs). In developing this virtual pilot, both parties are gaining an improved understanding of how strong cooperative approaches can be developed and implemented in practice, including fulfillment of the requirements and expectations of the Paris Agreement and future Article 6 guidelines.

The virtual pilot seeks to support Chile’s long-term plans for carbon neutrality and decarbonization of its electricity sector through incentives for “firm and flexible” renewable energy.

With extensive renewable energy potential, intermittent renewable energy is already economically competitive in Chile. However, in order to replace the existing coal-fired power generation—currently 38 percent of total generation—as called for in Chile’s decarbonization process, Chile requires firm energy resources that can be called on at night, as well as flexible energy resources that can back up the large and growing share of intermittent renewables and help mitigate transmission constraints. To avoid a situation where the existing coal-fired power generation is replaced with natural gas, this example collaboration looks at how Article 6 can jump-start investments in “firm and flexible” re