Chile has become the first nation in Latin America and the Caribbean to approve a carbon reduction project under Article 6.2 of the Paris Agreement, marking a landmark step in the region’s participation in international carbon markets.
The Chilean Ministry of the Environment (MMA) announced the authorization of a project that replaces a coal-fired boiler with a biomass system in the Ñuble Region—an initiative designed to curb greenhouse gas emissions while promoting industrial decarbonization.
The deal stems from a bilateral cooperation agreement between Chile and Switzerland, signed in December 2023 by Chilean Environment Minister Maisa Rojas and Swiss Federal Councilor Albert Rösti. The framework enables Switzerland to fund emissions-reduction projects in Chile in exchange for Internationally Transferred Mitigation Outcomes (ITMOs), which it can count toward its national climate targets.
Investment and Integrity
Through this mechanism, Switzerland is expected to channel as much as $100 million into Chilean clean-energy and industrial modernization projects. According to the Chilean government, the Ñuble project underwent a detailed technical review to ensure it met “the highest standards of additionality, transparency, and environmental and social integrity.” Officials emphasized that the resulting climate benefits are “additional to the commitments already made in Chile’s NDC.”
The collaboration is also designed to bolster Chile’s 2030 Agenda and Sustainable Development Goals, providing both environmental gains and economic incentives to shift away from fossil fuels.
Chile as a Regional Article 6 Leader
Article 6 of the Paris Agreement establishes rules for international carbon trading, allowing countries to collaborate in meeting their climate goals through verified emission reductions. Chile’s partnership with Switzerland positions the country as a regional leader in operationalizing these complex mechanisms.
What’s at stake is significant: if implemented effectively, Article 6 could unlock billions in private investment for climate projects across developing economies. But ensuring environmental integrity and avoiding “double counting” of carbon reductions will be crucial for maintaining global trust in the emerging carbon market system.
