Role of International Carbon Markets for Driving Innovation to Decarbonize LATAM Economies

International carbon markets bear the potential to raise additional funds to achieve economic viability of investments based on emission reductions generated by those investments. Therefore, they can accelerate innovation in different economic sectors and conduce towards decarbonisation and post-COVID economic recovery. However, it must be assured that selling emission reductions does not risk the fulfilment of countries’ own NDCs, presenting a challenge for the determination of which projects should be allowed for the participation in international carbon markets.

Chile has committed to become carbon neutral by 2050. With the energy sector being responsible for 78% of the country’s GHG emissions, this sector needs to lead decarbonization efforts. Innovation in low-carbon technologies needs to be fostered and carbon markets present an opportunity to accelerate this change.