The World Bank has granted a significant loan of US$150 million to support green hydrogen projects in Chile, marking the institution’s first financial aid for promoting green hydrogen and contributing to global climate change mitigation efforts.
The loan aims to advance Chile’s green growth and energy transition while assisting the country in achieving its target of carbon neutrality by 2050.
The “Chile Green Hydrogen Facility to Support A Green, Resilient and Inclusive Economic Development” project will primarily benefit local communities involved in clean hydrogen production, generating green jobs, stimulating economic growth, and decarbonizing local industries. The initiative will be overseen by the Chilean Production Development Corporation (CORFO), which will establish a blended finance fund dedicated to green hydrogen projects and develop risk mitigation instruments to improve financing conditions. Technical assistance will also be provided to foster the development of the green hydrogen industry.
Chile’s unique attributes, including abundant renewable resources and the ability to attract investments in large-scale clean energy projects, position the country to become a major global player in the green hydrogen industry. The project serves as a potential model for other Latin American and Caribbean nations, according to Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.
By mobilizing financial resources from the private sector and other multilateral partners, the World Bank aims to assist the Chilean government in harnessing the full potential of the emerging green hydrogen industry. The financial instrument is expected to attract additional private sector resources, leading to investments of at least US$280 million. The project aims to encourage early-stage investments in green hydrogen production, facilitating the transition from pilot projects to commercial-scale operations.
Chile envisions producing the world’s lowest-cost hydrogen by 2030 and becoming one of the top three hydrogen exporters globally by 2040. According to Chile’s National Green Hydrogen Strategy, this industry has the potential to attract up to US$330 billion in private investments and generate around US$30 billion in exports by 2050.
The Chilean Production Development Corporation (CORFO), responsible for implementing the project, is also a partner in the Hydrogen for Development (H4D) Partnership. This World Bank initiative, managed by the Energy Sector Management Assistance Program (ESMAP), aims to accelerate hydrogen deployment in emerging markets and developing countries.
Green hydrogen’s potential lies in its production through the electrolysis of water using renewable energy sources like solar and wind power. The resulting hydrogen is clean, highly efficient, and emits no greenhouse gases. Green hydrogen can play a crucial role in decarbonizing sectors where electrification is not economically or technically feasible, such as heavy industry and long-distance transportation. Additionally, it enhances energy security by enabling long-term storage and integration of renewable energy into the grid. Furthermore, green hydrogen can contribute to food security by producing green ammonia, a vital input for fertilizers.