By Invitation | Politics in Chile

Chile’s draft constitution would stop the country becoming a green powerhouse, says Juan Carlos Jobet

If approved, the text is bound to fall short of its good intentions, argues the former energy minister

CHILEANS WILL come to the polls to approve or reject a proposed new constitution on September 4th. It was drafted by a 155-member convention elected after the unrest—politely referred to as the Estallido Social, or ‘social outbreak’—that erupted in the country in late 2019. Many of its proponents argued that it would be an ecological constitution. But the truth is the opposite: if the draft is approved, Chile’s ability to protect the environment and to contribute to the global fight against climate change will be seriously damaged.

The most important complaints voiced by Chileans during the ‘social outbreak’ concerned inadequate pensions, inequality and abuses, such as cases of corruption, by the elite. Climate change and the broader environmental agenda was not one of the main drivers of the discontent. But neither, at first, were demands for a new constitution.

Yet in the aftermath of the unrest a broad political agreement was reached in Congress to draft one. The hope was that a new constitution would allow a new start and would answer some of the protesters’ demands. The idea was then ratified in a referendum by 78% of voters. During a year of work by the constitutional convention, environmental concerns became a central component of the draft. Nature, for example, would have its own rights, the enforcement of which any person or group could demand in court.

The constitutional referendum in Chile is important for the world. The country could be a powerhouse in the fight against climate change. It is a leading producer of copper and lithium and has some of the best solar-irradiance and wind resources on the planet to produce electricity. Its clean-energy resources are so abundant that Chile could produce and export green hydrogen and its derivatives to help bigger economies reach carbon neutrality. But in spite of its declared intentions, the draft constitution’s substance in fact hurts Chile’s ability to play a large environmental role globally.

Take copper. Chile is by far the biggest producer of the mineral in the world, accounting for almost 27% of global production. Copper is essential for solar and wind farms, and to build the transmission and distribution infrastructure needed to replace fossil fuels with clean electricity in transport, industry and residential and commercial buildings. It is also needed for electric vehicles. Bloomberg estimates that global copper demand will rise by over 50% by 2040, driven primarily by the energy transition.

What does the constitutional draft do for the Chilean mining industry? It makes it riskier and harder to develop new projects. The draft, for example, weakens the legal protection of mining rights. Under the current constitution, courts grant mining concessions that give property rights. The proposed text offers room for different interpretations regarding the extent of those rights, and could well end up creating a regime that revolves around simple administrative authorisations. That would leave mining investments subject to the whims of politically appointed officials, increasing uncertainty. And the text does nothing to solve the political and regulatory gridlock that has hampered the lithium industry in Chile for years now.

Water rights are a problem, too. Water is essential for mining, but under the new constitution miners (and landowners) would lose their property rights over water automatically and get simple, revocable permits instead. It also declares that water cannot be traded. Most big mining companies are building desalination plants for their own use. But the new constitution is also unclear about what rights will cover that desalinated water. These provisions will hurt miners’ ability to secure a reliable source of water, making investment in mining riskier. Weaker water rights could also hurt the nascent green-hydrogen industry, as water and clean electricity are necessary for producing hydrogen.

There are other areas of concern. One is labour legislation. Under the proposed text, only trade unions can represent workers, and strikes can start at any time and for any reason, increasing the risk of conflicts. Another concern is that Indigenous people would be given de facto vetoes over projects in large swathes of Chilean territory. And another is that a poorly conceived decentralisation effort in the proposed constitution, which could lead to the fragmentation of local authorities, might exacerbate NIMBYism. This would slow down project development, especially in critical infrastructure such as power plants, transmission lines or water and copper-concentrate pipelines.

The constitutional draft was inspired by a dominant ideological view—well spread among some environmental groups and the hard left—according to which nature can be protected by stopping new projects from being developed. The truth, alas, is much more complicated: to stop climate change, Chile and the world need more mining and clean-energy projects, not fewer. When it comes to copper, Cochilco, Chile’s public copper agency, estimates the country needs to deploy some $70bn in investment this decade alone just to keep up with the estimated growth in global demand.

The focus should be on making sure those much-needed projects are built quickly and with the highest social and environmental standards. That requires a well-funded, modern state that approves or rejects projects under a strict, predictable and transparent system of regulation. And it requires a lot of technology and investment: to use hydrogen instead of diesel in mining trucks, say, or to replace fresh water with desalinated water from the sea. Investment, in turn, requires clear rules and strong property rights.

The proposed constitution, besides a lot of wording about protecting the planet, does none of the substantial things that are essential to make its good intentions a reality. Its approval would be bad news for Chile, and for the world as a whole.
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Juan Carlos Jobet was Chile’s energy minister between 2019 and 2022 and its mining minister between 2020 and 2022. He is now the dean of the Business School at Universidad Adolfo Ibáñez in Santiago and a visiting fellow at the Centre on Global Energy Policy at Columbia University in New York.

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