As energy transition opportunities come knocking, Chile presses permitting bills gas pedal

Chile aims to get permitting reform legislation onto the statute books by the end of the year, a key measure to help get more pickaxes swinging and leverage energy transition opportunities.  

Two pieces of draft legislation – one targeting sectoral permitting and the other the environmental permitting system – are in congress, with a goal of slashing processing times.

The bills are among 21 in a recently announced congressional fast-tracking push, economy minister Nicolás Grau told BNamericas on the sidelines of investment promotion agency InvestChile’s annual international summit, held in capital Santiago.

“The idea of this fast track is to put in maximum effort to get all these bills approved by September 30, which is when budgetary discussion gets underway,” Grau said.

Reducing permitting times, along with trimming local bank long-term interest rates, are two ways to help accelerate the flow of investment and, especially, help it take big bites out of the energy transition carrot being dangled, delegates heard.

Referring to the permitting system, Grau told investors: “We know there are things we need to do better.” He added that, while the bills were under discussion, government officials and civil servants were nevertheless doing as much as possible within the bounds of the current regulatory framework.    

Chile has a multibillion-dollar pipeline of projects, with major investment drivers the clean energy and mining sectors, the latter positioned to benefit from climbing demand for energy metals, chiefly lithium and copper. Demand is also trending up for 24/7 supply of clean power to mining and other sectors of the economy. 

Between Q2 and end-December, up to US$24bn in projects – across the mining/metals, energy, infrastructure, water/waste and ICT sectors – could enter the construction phase, according to the BNamericas forecasting tool. 

Foreign direct investment in Chile has remained resilient. The country received a net flow of US$4.45bn in the first quarter after a solid 2023, when US$21.7bn was registered, the highest annual reading since 2015. Grau said the job of authorities was to help accelerate the pace.

President Gabriel Boric, underscoring the importance of state policy and a long-term vision, said the figures showed there was trust in the country. 

Boric said that there exists political differences but there was also lots of common ground with respect to the wellbeing of the nation, giving as an example a mining royalty bill that achieved consensus in congress, in turn, reducing uncertainty and helping unlock investment in the sector. 

Referring to opportunities, finance minister Mario Marcel told the event that a task was ensuring planned investment materializes: “We need to take advantage, we can’t let this opportunity pass us by.”

On a similar topic, the World Bank’s Latin America chief economist, William Maloney, told the conference that Chile and the rest of the region was “incredibly well positioned” to ride the energy transition wave, citing attributes such as relatively clean power grids. Latin America also holds abundant minerals resources.

A trend is emerging where trade and investment among politically aligned and allied countries is strengthening and Latin America needs to be aware of this change, delegates heard.

Green goods as well as the services industry are bright spots on the global trade and investment landscape, the secretary-general of UN trade and development organ UNCTAD, Rebeca Grynspan, said.

Challenges in the region include boosting productivity, infrastructure and skilled workforces. 

InvestChile director Karla Flores told the conference that among local objectives of foreign direct investment was creation of quality jobs and raising the bar in the spheres of training, knowledge transfer and productivity. 

Foreign investment is a key driver of economic growth in Chile, a country expected to see a GDP expansion of 2.7% this year, as capacity gaps are filled and amid favorable prices of key export revenue generator copper.