Chile set itself the objective of becoming one of the world’s top producers of green hydrogen a couple of years ago. However, a number of challenges have developed along the road.
The hurdles that need to be removed range from a technology center’s unsuccessful proposal to the lack of guaranteed local demand. The nation is still competing, though.
Chile presented its National Green Hydrogen Strategy in November 2020. The plan aimed to produce 5GW of electrolysis capacity by 2025, the cheapest green hydrogen on the planet by 2030, and one of the top three exporters by 2040.
This strategy would be modified in 2025 as part of the defined roadmap, specifically to take into account the improvements in infrastructure and technology anticipated by that time. But the government of Gabriel Boric introduced a new schedule for the distribution of public lands for the development of the projects at the beginning of last August, pushing out that update to the end of this year.
According to the Ministry of Economy, which Diálogo Chino consulted, the goal of green hydrogen is to “create an industry that promotes a new development model based on the generation of local value,” bolstering the production of H2V to cut emissions and encourage more sustainable growth.
In August, the Boric administration unveiled a brand-new committee for the development of the green hydrogen industry. The committee, made up of representatives from numerous ministries, will work to support the state’s development of the industry. The agenda for the energy sector that was recently presented and mentions the implementation of the first 10 green hydrogen projects are now added to this.
The first six green hydrogen projects will be funded with a total of US $ 1 billion in national and international investment, according to an agreement signed by Corfo, the government organization in charge of fostering entrepreneurship, innovation, and competitiveness in the nation, at the end of 2021.
Green Power by Enel In the Magallanes region, Chile’s “Faro del Sur Project” plans to create 25,000 tons of green hydrogen annually, while Linde GmbH’s “HyPro Aconcagua” anticipates producing 3,000 tons. For its part, CAP S.A. plans to construct a facility in the Biobo Region that will generate 1,550 tons of green H2V annually.
The projects “HyEx – Green Hydrogen Production” led by Engie, “Antofagasta Mining Energy Renewable (AMER)” in the Antofagasta Region, and “Baha Quintero Green Hydrogen” led by GNL Quintero and Acciona Energa in central Chile, notably in the Valparaso Region, round out the list.
According to Mara Paz de la Cruz, manager of the Chilean Hydrogen Association, “What is being done is to push from the State and from the companies the installation of an industry that will bring us zero-emissions energy and that will provide development, sophistication, green jobs, and incentives for the development of human capital.”
In order to make Chile one of the nations able to provide the most competitive hydrogen in the medium term, “this perspective shows a transversal push to this industry.”
Although the current course of events is positive, there are still a few loose ends to be addressed.
The “Baha Quintero Green Hydrogen” project would be in jeopardy because of insufficient demand, according to Miguel Arrarás, director of Acciona Energa in Chile. “Although we have spoken with a few local businesses, our price returns are negative. The construction of the plant is not guaranteed “He gave a warning last August during a seminar.
In addition, Enel Power Green recently decided to remove the “Faro del Sur Project” from the state’s environmental impact assessment. As all needed information was provided, the company’s project observations were “above the ordinary standard.” The initiative “suffers from a tremendous lack of knowledge,” according to the administration.
Concentrate on exporting green hydrogen
Hermann von Mühlenbrock, the former president of the Sociedad de Fomento Fabril de Chile (Sofofa), assured that the government’s development strategy for this business is not the best one in a letter at the end of last August.
The warning is based on the export agreement for green hydrogen negotiated by the German Port of Hamburg and the Ministry of Energy, in which private parties were not present. According to von Mühlenbrock, their involvement is essential because each project entails an investment of more than US$2 billion.
The Pontificia Universidad Católica de Chile’s Patricio Lillo, a professor of mining engineering, concurs with the prognosis. He told Diálogo Chino that the export of green hydrogen had received all the attention, as opposed to domestic usage.
Among other things, this has caused no work to be done on the territory’s planning, which is necessary for the growth of an enterprise like this.
“The manner in which the area is occupied must be planned. In addition to considering the sum of local effects, a more comprehensive analysis necessitates the installation of the appropriate infrastructure, including roads, pipelines in ports, water desalination plants, and other things “the scholar explained. He continued that planning at the national level can significantly lessen the damage.
The need of providing clarity on territorial planning and the viability of issues like licenses or the usage of vital infrastructure is shared by Mara Paz de la Cruz. In order to get a social license for initiatives, he stated, “planning processes are crucial, where the layers that will be applied for the installation of projects are evident.”
He stated that it is important to provide the conditions necessary for H2V efforts to succeed commercially and, as a result, be able to take advantage of chances for the growth of a local sector and for export. “We think that promoting foreign investment in energy-intensive sectors of the economy, including steel and cement, will be a problem for the nation in the future. They would have access to electricity with a definite green attribute by settling in Chile, “added he.
A halt to technological advancement
The National Green Hydrogen Strategy and the Energy Agenda 2022–2026 both address local technological development as one of their cornerstones; this is another area where Chile is experiencing a slowdown.
The Chilean Institute of Clean Technologies (ITL) was put up for tender through Corfo in January 2021 by the previous administration, which departed office in March 2022. Associated Universities Inc. (AUI), a grouping of nine American universities and four Chilean universities, won the competition.
Instead of domestic use, the export of green hydrogen has received all the attention.
With regard to the outcome of the tender, the Association for the Development of the Institute of Clean Technologies (ASDIT), which was composed of 11 Chilean universities among other organizations and had also submitted a proposal to carry out the ITL, made a number of complaints and claimed procedural flaws.
It seems absurd that an international consortium, with few connections to the Chilean mining and energy industries, intends to lead through the ITL a proposal for the development of a new industry for our country, according to a statement from ASDIT. “We are obliged to make public our deep disappointment,” the statement continued.
Finally, a report was produced by the Chamber of Deputies’ investigation committee concluding that the proposal made by ASDIT was, in fact, far better than that of AUI. Corfo finally consented to reallocate the research institute after the Supreme Court declared the award unlawful, but without offering a specific timetable.
Corfo was approached by Diálogo Chino regarding the status of this procedure as well as the effects of the ITL’s delay on the growth of the green hydrogen industry in Chile, but no comment was given.
