Chile is a lightly populated country of 15 million that has undergone large economic transformations. Over the past 25 years, the economy has evolved from a slow-growing state-directed economy into a fast growing, market-oriented economy. Its South American neighbors are imitating this transformation. The changes have been especially great in the transport sector, with the private sector taking over many traditional public sector activities. This report addresses the implications of Chile`s economic growth on transportation, energy use, greenhouse gas emissions, and other environmental impacts.. Both urban and interurban transport are included. Chile`s transport sector is experiencing rapid growth, especially in Santiago. Between 1985 and 1998, the economy increased 2.5 fold (7.4% per year) and the transport sector more than 3.5 fold (over 10% per year). Public transport continues to lose market share. Between 1977 and 1991, cars increased their share of passenger travel by more than 60%, while the bus share fell 27%. These shifts are motivated by the strong urbanization process, with over 85% of the population now living in cities; and strong growth in car ownership, with one in ten persons now owning a car. Cars now account for 26 percent of travel within cities (measured as passenger-kilometers) and 41 percent between cities. Transport consumes almost 40% of energy sector emissions and is responsible for about 28% GHG emissionsin in Chile. Of the total GHG emissions from transport, 45% is from cars and taxis, 24% from trucks, 14% from ships, 10% from planes, 9.5% from buses, and nearly zero from trains. Passenger transport accounts for about 2/3 of transportation`s greenhouse gas emissions (GHG), while about 1/3 is from freight; and interurban transport accounts for over half of total GHG emissions. Chile`s policymakers, both at the national and sectoral levels, have largely ignored the environmental consequences of rapid development; a policy of «grow first, clean up later» was pursued until 1990. The lack of interest in GHG emission reductions stems from this growth- oriented thinking, as well as a realization that Chile`s impact on greenhouse gases is small compared to major industrial nations. With only 15 million people each using on average less than 1/6 as much energy as each US resident, and with extensive carbon-consuming biotic resources, including vast forests, offsettinjg its anthropocentric production of CO2, its relative impact on global climate change is small. Thus while sympathetic to global warming issues, Chile is not likely to view its contribution as significant and global warming is not likely to motivate policy action. But worsening pollution and traffic congestion have placed motor vehicles at the center of policy debates over its development path. Thus, even though global warming is not a priority issue for the nation, actions directed at resolving transportation and air pollution problems will have the side effect of slowing greenhouse gas emissions growth. We develop high («business-as-usual») and low scenarios for greenhouse gases for the next two decades. The scenarios are based upon interviews with experts and policymakers, and extensive analysis of transport and energy data gathered from a wide range of Chilean sources. In the next twenty years, in the «business-as-usual scenario,» we assume strong continued economic growth (5.8% annual GDP growth) and no strong actions taken to curb environmental problems. The result is a doubling of energy consumption by the transport sector, and more than a doubling of greenhouse gas emissions. Passenger-related energy use and greenhouse gases increase faster than freight-related energy use and emissions, resulting in passenger transport increasing its share of transport greenhouse gas emissions from 70% to 80% over the 20 years In an alternative «low emissions» scenario, changes include policies to improve and enhance public transport, and to introduce cleaner and more efficient vehicles. The net effect is a 34% increase in greenhouse gas emissions, resulting in 38% fewer emissions than in the high scenario.