In the article, I analyze the path through Congress of the first dedicated renewable energy law passed in Chile in 2008, Law 20257. The analysis highlights some of the critical elements around policy making, such as agenda setting, strategic executive-legislative relationships, timing of bill discussion and adoption, and stakeholder positions. I found evidence that supports the idea that this particular law was passed not to decisively embrace renewable energy, but to avoid Congress members to push for profound changes in the electricity sector framework. In a context of relatively high risk and investor uncertainty, the executive pushed for an apparently novel yet “harmless” bill that didn’t change critical institutions needed to spur renewable energy sources adoption, particularly non-conventional ones such as wind, solar, and geothermal.
A set of policy prescriptions are distilled from the analysis. First, national consensus on the societal benefits of renewable energy adoption and particularly the spillovers of adopting new technologies must be reached. The executive and Congress will push for major institutional changes only when there’s agreement on the distributional consequences and private actors internalize the new arrangement. Second, Congress members must be provided technical assistance to discuss in equal terms with the executive; this is particularly relevant for technocratic regimes like the Chilean one. Finally, adequate identification of which institutions should be changed and how is critical for a thorough revision. In the case of Chile, the lack of appropriate financial instruments and institutions, and the negligence in creating a clean certificate trading market and reforming the system operator turned to be formidable barriers for change.
You can find the full article here.