Chile at the forefront of green hydrogen and energy transition

In Chile there are 42 green hydrogen projects, of which 14 are in the feasibility phase, according to the Chilean Hydrogen Association. The government of Gabriel Boric signed in November 2022 agreements with the Inter-American Development Bank (IDB) and the World Bank (WB) for the financing of green hydrogen. The sum of both loans is US$ 750 million.

If the deadlines are met as established in the Haru Oni project, a pioneer in the world, the commercialization process will begin in March 2023. Construction began in July 2021, the first liters of eFuel were produced in December 2022 and next month production would begin for incorporation into the integrated energy system.

The project is of the transnational company HIF (Highly Innovative Fuels), whose head office is in Houston, United States. The Chilean plant is in Punta Arenas, in the south of the country, where it can take advantage of wind energy.

The manufacturing process of green hydrogen, as reported on its own website, arises from water through an electrolysis process carried out with wind power. It then "combines the hydrogen with CO2 captured from the atmosphere and through a synthesis process will produce eFuels, including carbon neutral gasoline (eGasoline) and carbon neutral liquefied gas (eGL)".

The eFuels are carbon neutral, also called green fuels, producing zero greenhouse gas emissions. The Haru Oni project will become the largest clean synthetic fuel production plant in Latin America.

Chile's renewable energy challenges have a number of comparative advantages. In public statements in June 2022, three months after assuming the presidency, Gabriel Boric said: "Green hydrogen is a real alternative for an energy transition that will lead us to a more sustainable future".

The truth is that Boric took the post of what had already been a state policy, initiated by Sebastián Piñera and Michelle Bachelet, two presidents of different signs but who bet on the energy transition. It was Bachelet's turn when Chile signed the Paris Agreement in 2015.

In 2022, with Boric in the Palacio de la Moneda, the country also ratified the Escazú Agreement and the Congress approved a Framework Law on Climate Change that sets as a goal that the country should reach carbon neutrality by 2050 at the latest.

This is the framework within which green hydrogen projects are being developed, which also open a window for the future export of carbon neutral fuels.

Green hydrogen inevitably requires renewable energies, mainly solar and wind, and cannot be generated with fossil or hydroelectric energies. Because of its geography, Chile has comparative advantages in this area.

Eduardo Bitrán, a member of the center-left Party for Democracy, former vice-president of the Production Development Corporation (CORFO) during Bachelet's last term, told El País de Madrid: "The north, with the Atacama Desert, has the best solar radiation in the world, not only in intensity, but also in the number of hours, which significantly reduces the cost of producing it. And we also have Magallanes in the extreme south of Chile with its important and stable winds, which transform the region into one of the best areas in the world, if not the best, to produce green hydrogen".

After Bachelet's second term, in 2020, it was the right-wing President Sebastián Piñera who presented the so-called National Green Hydrogen Strategy.

By then, within six years, Chile had increased its wind and solar energy generation capacity fivefold. The goal is to have 70% of its electricity generation based on clean energy by 2030.

The ambitious project includes the generation of the cheapest green hydrogen on the planet, supported by the comparative climatic advantages in both the south and the north. If it succeeds, Chile will be an exporter of this "green gold". The current energy crisis produced an increase in the costs of fossil energy, which generates an attraction for investors. In fact, German Chancellor Olaf Scholz emphasized his country's interest in being part of this process.

Chile, the world's leading copper producer, began to venture into hydrogen production due to mining, basically from copper deposits, which represent 10% of the country's GDP. However, the mining industry has an impact on the environment, among other things because the transportation of minerals is done in trucks that consume gasoline and in the mines explosives are used with ammonia manufactured with fossil gas. In this transition, some mining companies already have their own green hydrogen plants to start decarbonizing the process.

The green hydrogen generation process already has six tendered projects and agreements signed with European countries for its future export once a substantial part of the domestic market is covered.