Chile cleared the United Nations Paris Agreement Crediting Mechanism (PACM) for use against the country's $5-per-tonne Green Tax and advanced eight renewable energy projects into Article 6.2 review with Japan, the Ministry of the Environment announced. The dual regulatory package links domestic carbon pricing with international compliance markets for the first time in Latin America.

For Environment Minister Maisa Rojas, the decision operationalizes a policy stance she has publicly defended. "Price signals and credit mechanisms remain essential tools for driving private investment toward sustainable, zero-emission technologies," Rojas said.

What does this change for Chilean emitters?

Corporate taxpayers can now submit PACM-issued credits into the Sistema de Compensación de Emisiones (SCE) to reduce their Green Tax bill. The Ministry of the Environment added the UN standard alongside three existing registries — Verra, Gold Standard, and the Climate Action Reserve — that previously held monopoly status as eligible offset sources.

Each PACM credit offsets $5 of tax liability at the prevailing rate. The change reduces compliance friction for industrial facilities that already hold UN-issued units from prior procurement cycles and widens the available supply pool for buyers seeking cheaper offsets.

What does the Japan agreement unlock?

The Chile-Japan Joint Committee finalized administrative rules and reporting guidelines that authorize Internationally Transferred Mitigation Outcomes (ITMOs) to flow between the two countries under Article 6.2. The bilateral Joint Crediting Mechanism (JCM) pipeline currently holds 17 total initiatives.

Eight advanced projects — covering solar generation, agricultural residue-to-energy facilities, and industrial biomass plants in the Maule, Valparaíso, and Ñuble regions — now face formal evaluation by Chile's National Article 6 Committee. The remaining nine sit at earlier stages of the same pipeline.

Each authorized transfer triggers a corresponding adjustment, a bookkeeping step that ensures the underlying emission reduction counts toward exactly one country's climate target. The mechanism blocks the double-counting problem that has dogged voluntary carbon markets for two decades.

Why does this matter beyond Santiago?

Chile became the first Latin American jurisdiction to embed Article 6.4 PACM credits inside a domestic compliance scheme and to authorize live Article 6.2 trades with a G7 partner. The combination gives emitters a domestic hedge against rising tax exposure while giving Japanese buyers a sourced pipeline of mitigation outcomes tied to Chilean renewable assets.

The framework also imposes additionality criteria that screen out credits lacking verifiable emission reductions beyond business-as-usual activity. By tying both domestic offsets and bilateral trades to the same screening standards, Chile has built what the ministry describes as a high-integrity gateway for cross-border climate finance.

What comes next?

The National Article 6 Committee will complete its evaluation of the eight advanced projects before authorizing the first ITMO transfers to Japanese entities. The ministry has not published a decision deadline.

For Chilean compliance officers, the immediate practical change is direct: PACM units now count toward Green Tax liability at $5 per tonne, the same face value applied to units from Verra, Gold Standard, and the Climate Action Reserve. For Japanese carbon market participants, the eight-project review represents the first concrete Article 6.2 asset pipeline originating in Latin America.