Chile has plunged into her worst political crisis in decades. The ongoing unrest in Latin America’s richest nation is a warning for politicians to resolve social discontent before it metastasizes. However, Chile also offers a warning for climate activists: policies that drive up living costs will be met with popular resistance.
Meager pensions and perceived widening inequality had a role to play in the violent riots, but the elephant in the room is Chile’s high energy prices. Let us not forget what acutely triggered the protests: a hike of the capital’s subway tickets, the third hike in less than a year. This came on top of a 10.5 percent rise in electricity bills in May and another one of 9.2 percent in October.
The Price of Good Intentions
Faced with mounting violence across the country, the embattled administration of conservative President Sebastián Piñera gave up on the transportation and electricity increases, but the turmoil continued. During that initial wave of protests, 20 people died, around 1,200 were injured, and more than 7,000 were arrested. Losses and damages to Chilean businesses and to Santiago’s subway totaled $1.4 billion and $400 million, respectively.
Piñera even cancelled two global summits scheduled for this year, including the COP25 climate conference. The Chilean government had welcomed it with open arms, given the nation’s embrace of green-energy policies. In 2015, Chile became the first country in South America to enact a carbon tax. Plastic bags are banned across retail and wholesale commerce. BloombergNEF has declared Chile a global leader in investment and production of non-conventional renewable energy sources.
The government even aims to obtain 70 percent of all energy from renewable sources by 2050. Another major goal is to power the entire public-transport system with so-called clean energy and increase the share of electric cars to at least 40 percent of all private vehicles.
Needless to say, all this transition is costly and translates to higher prices of goods and services for final consumers. The green-energy kick has driven several hikes in transportation and electricity bills, and it will continue to do so. However, the Chilean people are not willing to put up with them, no matter how well intentioned they may be.
In Santiago province, an autonomous commission of experts set public transportation fares based on a predefined formula. They periodically review the price of inputs, such as oil and the US dollar, and propose an adjustment of subway, bus, and train tickets. In March 2019, the government added a new factor, however: the cost of electricity.
It’s easy to see why. Santiago has purchased over 400 electric buses, in addition to 490 “environment-friendly” fuel-powered units which cost two or three times more than regular ones. Almost 70 percent of the city’s subway is powered by renewable energy sources.
Not only is transportation on the rise due to this shift to green policies. Electricity production itself has become more expensive. The government is still paying for steep contracts arranged years ago that today power Chilean homes. José Venegas, who presides over the nation’s energy commission, expects the cost of power generation to start dropping only in 2023.
Revolt against Elite Imposition
Chile’s protests are the latest example of green policies coming back to bite the elites that imposed them on the populace. A year ago, a fuel-tax hike unleashed violent riots in France and gave birth to the Yellow Vest movement. Similar demonstrations erupted in Belgium, the Netherlands, and the United Kingdom. Five weeks later, the strikes spread to Canada, where protestors protested Canada’s Prime Minister’s carbon tax and impediments to the nation’s energy sector.
Comparable grievances in different parts of the world highlight a common theme: top-down measures to boost green-energy production are self-defeating. As Epoch Times columnist James Taylor has noted, “faced with a choice between suffering certain lower living standards today or dealing with speculative climate change in the distant future, people wisely choose the latter.”
Alberta’s repeal of the carbon tax is exhibit A. Businesses and consumers realized it was making their lives much harder than what proponents had promised—so they rightfully rejected it. If Canadians will not tolerate unnecessary higher energy prices, one cannot expect poorer Chileans to stand by passively.
The social disruption in Chile should be in the minds of Canadian policymakers when they enact the next green fad. In particular, creating environmental regulations and programs without looking at the price tag for citizens is akin to creating a time bomb. An economic downturn or changing international trade may be all that is needed to set it off.