The Institutional Framework

Chilean National energy policy, since the late 1970s, has been structured around two central pillars: economic efficiency and the subsidiary role of the state (APERC 2011).

Following the 2004 Argentine gas crisis and the 2007–08 electricity shortage, the Chilean government developed a new long-term energy policy. The government, through the CNE, published new energy policy guidelines in 2008, which set out six energy priorities⁷² (CNE 2008).

The general approach to EE changed in 2005, when the government began to develop an Energy Efficiency Policy and included it as one of the central elements in its strategic priorities for energy (OECD-IEA 2009). This was reflected in the inclusion of EE as one of the central elements of the government's energy policy, and the creation of the National Energy Efficiency Program (Programa País de Eficiencia Energética, or PPEE). In the year 2005, the Chilean government organized and brought together a group of public and private stakeholders and places the Ministry of Economy, Development and Reconstruction in charge of starting up and implementing the PPEE. Currently, PPEE is the main mechanism whereby the Government of Chile’s energy efficiency policy and programs are developed and implemented. To develop PPEE, a committee was created including representatives from the most relevant State institutions, the private sector, local governments, and civil society. Thus, the PPEE Commission was created by a supreme decree signed by the ministers of Economy and Energy; the Secretariat General of the Presidency; Public Works; Transport and Telecommunications; Education; Housing and Urbanism; and Mining (see APERC 2011).

72 The energy priorities set out by the CNE are: 1) strengthening institutions, 2) promoting energy efficiency, 3) optimizing diversification, 4) ensuring sustainable development, 5) supporting equal access, and 6) contingency planning (CNE 2008).

With the aim of strengthening the organisation of the energy sector in Chile, a bill to create the Ministry of Energy (MINEN) was presented to the Chilean Parliament in 2008, and was approved in November 2009. In February 2010, the new MINEN started working. It centralises the functions of developing, proposing, and evaluating public policies in the area of energy, including the definition of objectives, the regulatory framework and strategies to be applied, and the development of public policy instruments (APERC 2011).

Figure 18: The Institutional Framework of the Energy Sector (Source: Own illustration basedMINEN 2013)

All public services in the energy sector are now overseen by the MINEN, including the CNE, the Superintendence of Electricity and Fuel (Superintendencia de Electricidad y Combustibles or SEC), and the Chilean Commission on Nuclear Energy (Comisión Chilena de Energía Nuclear or CChEN). In 2010, the MINEN created two important institutions: the Renewable Energy Centre (Centro de Energías Renovables or CER) and the Chilean Energy Efficiency Agency (Agencia Chilena de Eficiencia Energética or AChEE). At the same time, the MINEN is responsible for developing directives and policies, for delegating the functions related to: implementation of policies and instruments to other organisations which are not directly subordinate to the MINEN but are closely connected to it (see Figure 18). These public institutions will be responsible

for implementing national programs and specific work plans, technical regulation, enforcement, and many other functions related to policy implementation. The activities of these agencies are integrated with other government agencies, and also involve public–

private cooperation (APERC 2011, pp.35-36).

Under this institutional framework, is worth noting that the AChEE, a public–private organisation (a foundation), was designed as a joint corporation in where the State and the private sector will participate. In this sense, the decision making it is shared between energy users and promoters of efficient use of energy. This model of public-private participation is used in various countries around the world (such as the United Kingdom and Germany) where the experience has been successful. It is based on the existence of a common interest of the State and private parties in energy efficiency (APERC 2009).

The public-private nature of the AChEE is consistent with what was proposed in the government modernization agenda. Its structure seeks to include a board of directors with various key stakeholders in the area of energy efficiency (EE); contributing in this way to the efficiency and transparency for energy users and for the general public. AChEE functions are centred on activities with a comparative advantage, such as technical assistance and the implementation of programs which require logistical expertise and flexibility for action.

The mission of AChEE is to consolidate EE in a way that contributes to Chile’s sustainable energy development. This mission is achieved by following the AChEE strategic objectives are: 1) to establish the institutional foundations and regulatory framework for energy efficiency; 2) to develop incentives and support tools for energy efficiency; 3) to develop useful and accessible information for public and private decision-makers, as well as collective and individual ones; 4) to position and introduce energy efficiency in all levels of training, both formal and informal; 5) to take advantage of international experiences and instruments to accelerate the development of energy efficiency and measure the reduction of GHG emissions; and 6) to strengthen institutional management through quality control processes (ISO).

Although the Chilean government’s approach for promoting EE has changed over time, there has not been a priority, nor have they been included in State policies (APERC 2009). Until a few years ago, the main instrument for the government to encourage EE was to ensure that energy pricing mechanisms were as efficient as possible. The main focus was that a competitive market and fully cost-reflective energy prices would result in

an optimally efficient use of energy (see OECD-IEA 2009). Moreover, the Chilean government made occasional attempts to promote EE through the implementation of specific measures; Namely: the implementation of the Conservation and Rational Energy Use Programme (Programa de Conservación y Uso Racional de la Energía or CUREN) and the implementation of subsidies to supply energy-saving light bulbs to lower income population on 2008. Nevertheless, the implementation of such measures was not long-lasting and did not have a significant effect (see OECD-IEA 2009, APERC 2009).

Apparently, the prospect of the Chilean government from implementing energy efficiency measures has sought to let the market take care to take the initiative in implementing EE measures. The evidence suggests that this has not been the case. Therefore, other key players involved in the Chilean context have been protagonists in the dissemination of the initiatives. The main interest and actions towards encouraging EE came from the non-governmental sector and the scientific community; namely: the Programme of Research in Energy at the Universidad de Chile; international institutions working in the Chilean context, like the German Society for International Cooperation (GIZ) and the Economic Commission for Latin America (CEPAL); certain energy-intensive companies like the National Copper Corporation (CODELCO) and other institutions (see APERC 2009).

Among other initiatives, Chile has established a product labelling program equivalent to the European comparative labelling scheme, this breaks-down all similar models of a product into one of seven efficiency categories: A (most efficient) through G (least efficient). Product labelling is currently applied to five lines of products in Chile⁷³, with another five to six planned for to be implemented in 2011⁷⁴ (APERC 2011). Products under this initiative are mostly residential applications. In the near future, it is expected to extend the labelling program to small commercial applications.

73 Incandescent and compact fluorescent light bulbs, one- and two-door refrigerators, and microwaves.

74 Motors, heating, ventilating and air-conditioning, housing, automobiles, television sets, and decoders.