Supporting the phasing-out of coal-fired power plants in Chile

Phasing-out of coal-fired power plants has become a global necessity, given its high contribution to greenhouse gas emissions (GHG). The government of Chile has taken important steps to phase out of coal-fired power plants and promote a socio-ecological just transition. Recognising the need to address climatic and ecological changes that adversely affect not only the environment but also the labour market, Chile decided to prioritise sustainable development and resilience. While transitioning towards a greener economy poses challenges to the labour market, it also presents opportunities if the right investments are made and if certain sectors are supported.

A major milestone was reached in Chile in 2019 when the Government, in agreement with the country’s four largest contractors, decided to close all of Chile’s coal-fired power plants by 2040. Recognising the high dependence on coal-fired power plants, which contribute to 80% of Chile’s GHG emissions, and building on the significant potential for renewable energy development, the government designed a Plan of Phase-out and/or Reconversion of Coal Units in 2020. The plan built on the work of a ‘’Phase-out and/or Reconversion of Coal Units Roundtable’’, which included the owners of coal units, the public sector, consumer associations, as well as workers’ representatives and civil society actors to assess the economic, social and environmental effects of phasing-out of coal-fired power plants. This plan aims to achieve 70% electricity generation from renewable energy by 2030, 20 years earlier than anticipated in 2015. By 2024, the plan includes phasing out 11 coal-fired power plants, representing 31% of the capacity, with all units to be phased out by 2040, and reaching carbon neutrality by 2050.

Consultations at the level of the Phase-out and/or Reconversion of Coal Units Roundtable indicated that phasing out or converting these units by 2030 would create between 2 000 and 8 000 new jobs, and between 13 000 and 20 000 new jobs by 2050. However, this transition would also result in the loss of 4 000 direct jobs and 9 000 indirect jobs. Different measures were recognised to ensure a just transition, including the need for dialogue between affected parties and decision-makers, a clear timeline and employment-focused actions. These measures include reskilling and upskilling programmes, support for entrepreneurs, early retirement options, employment insurance and job creation in green sectors (Ministry of Energy, Chile and GIZ GmbH, 2020).

In October 2022, the Office for a Socio-ecological Just Transition was established under the Ministry of Environment. The Office defines the Socio-ecological Just Transition as “the transformation and adaptation of sociocultural systems towards a balanced ecosystem, prioritising the well-being of individuals, and sustainable production models to address the triple crisis of biodiversity loss, climate change, and pollution. This process aims to ensure a focus on human rights, gender equality, and decent work”.

The Office for a Socio-ecological Just Transition is an advisory committee to the President and includes representatives from nine ministries, including the Ministry of Labour and Social Security (MoLSS). It is responsible for developing policies, programmes, and projects, as well as proposing legislative changes to support social transformations, environmental protection, and economic development. The core principles are decent work, gender and inter-generational equality, resilience, and ecological regeneration. Social dialogue and collective empowerment are central to promoting a balance between sustainable economic development and environmental protection at the regional level.

The Office for a Socio-ecological Just Transition is responsible for designing the National Strategy for a Socio-ecological Just Transition. This strategy is part of the social pillar of Chile’s Nationally Determined Contributions (NDCs) under the Paris Agreement. A panel of experts composed of 32 representatives from the private sector, academia, civil society, international organisations and social partners met between May and July 2024 to support the elaboration of the strategy. Additionally, the office oversees Environmental and Social Recovery Plans (Planes de Recuperación Ambiental y Social - PRAS) in three designated “regions of sacrifice” (zonas de sacrificio): Huasco, Quintero – Puchuncaví and Coronel. These plans aim to demonstrate that environmentally sustainable development can co-exist with industrial activities while protecting the environment and human health. Councils on Environmental and Social Recovery (Consejo para la Recuperación Ambiental y Social - CRAS) are responsible for developing and implementing the respective PRAS ensuring that regions of environmental sacrifice do not become regions of employment sacrifice. These councils include representatives from government institutions, civil society and social partners ensuring democratic governance. 

In the three regions where a PRAS is in place, several measures are ongoing to support decent work, with social partners actively addressing workers’ challenges:

• In Quintero Puchuncaví, it was agreed to support skills development in tourism, services and entrepreneurship, to facilitate work transitions alongside with the private sector, as well as to strengthen employment services and occupational safety and health for workers exposed to contamination. (Ministerio del Medio Ambiente, 2017)
• In Huasco, where nearly one third of the local labour force comprises fishermen, labour market assessments have helped to identify the need for support in skills development, entrepreneurship and matching. Agreements have also been made with fishing companies to improve local job opportunities (Ministerio del Medio Ambiente, 2017).
• In Coronel, plans include establishing a Technical and Vocational Education and Training (TVET) centre, supporting skills development and matching and implementing occupational safety and health training. Further, agreements were made between local companies, public institutions and educational institutions to facilitate better work transitions (Ministerio del Medio Ambiente, 2018).

Moreover, the National Training and Employment Service (SENCE) through its 16 regional offices provides training scholarships for workers that have been affected by the closure of coal-fired power plants. At the same time, ongoing skills anticipation initiatives aim to identify skills and occupations needed for the transition to green energy production. Additionally, social partners are collaborating within the framework of “Chile Valora”, the national vocational qualification authority, which is composed of tripartite partners, to establish new qualification frameworks. Chile Valora has already established occupational standards for green jobs to support green hydrogen production. This approach identifies skills needs and gaps and provides upskilling and reskilling to support the certification of the skills that are needed to foster a just transition.

Social dialogue has also played a key role in supporting those workers affected by the closure of coal-fired power plants. For example, in April 2022, after a 12-day strike by subcontracted workers at the Bocamina II power plant, an agreement was reached. Tripartite partners agreed to establish a working group including government representatives, subcontracted workers, and company representatives to ensure equal treatment between subcontracted workers and those directly employed by the operating company. The working group discussed measures to ensure that subcontracted workers have access to medical examinations to assess contamination levels from heavy metals and that they receive support to relocate to areas with better job prospects.