Chile

Country: Chile

Document type: National Strategy

Title: National Green Hydrogen Strategy

Released: November 2020

Summary Points:

The ambitions of the strategy are defined as:

2025

  • Chile is the top destination for green hydrogen investment in Latin America
  • 5 GW of electrolysis capacity operating and under development
  • 200,000 tonnes per annum production in at least two ‘hydrogen valleys’

2030

  • Chile is the world’s cheapest producer of green hydrogen (<US$1.5/kg)
  • Chile is among the global leaders in the export of green hydrogen and derivatives
  • Chile is among the global leaders in the production of hydrogen via electrolysis (25 GW capacity)

The Strategy describes a three stage (or wave) approach to implementation:

  • The first stage (to around 2025) focuses on replacing imported ammonia for local production, and replacing hydrogen produced from fossil fuels used in oil refineries. The use of green hydrogen for heavy and long-distance transportation becomes attractive for fleets and machinery operating in concentrated zones (or ‘valleys’).
  • The second (to around 2030) sees first exports of hydrogen and derivatives (e.g. ammonia). More competitive production cost of green hydrogen allows for replacement of an increasing share of liquid fuels in land transportation and increased blending into gas grids.
  • The third (beyond 2030) sees fuels derived from green hydrogen decarbonising the shipping and aviation sectors and exports continuing to grow.

A set of specific Actions is described across four broad areas:

  • Promotion of domestic and export markets – includes launch of a funding round of up to US$50 million to support green hydrogen projects
  • Standards, safety and piloting
  • Social and local development
  • Capacity building and innovation

Green Hydrogen Action Plan 2023-2030

In April 2024, the Green Hydrogen Action Plan 2023-2030 (‘Action Plan’) was published (Spanish language).

The Action Plan proposes 18 lines of action that are further divided into 81 specific sub-actions, which are to be implemented in two stages:

  • Stage One: 2023 to 2026 – focus on implementation through defining environmental, social and labor standards, implementing an efficient permit system, promoting scientific research on the industry and making progress on tax and financial incentives.
  • Stage Two: 2026-2030 – focus on developing territorial planning instruments and regulations, supporting local development, preparing human capital to support development.

Media reports indicate the Action Plan focuses on ten milestones, all to be completed within the first stage, including:

  • The formal opening of the Financial Facility, called “Facility H2V”
  • The closing of the first fiscal land allocation process and kicking off a second allocation process
  • Strengthening Chile’s R&D Law by tripling its upper tax credit threshold, and
  • Publication of Public Environmental Baselines to facilitate environmental assessment processes and standardize available information.

Funding Initiatives

In December 2021, it was reported that the Corporation for the Promotion of Production (Corfo, Chile’s Economic Development Agency) had selected six projects to advance development of the hydrogen industry in Chile. The projects have a reported electrolyser capacity of 388 MW capable of producing more than 45,000 tonnes of renewables-based hydrogen annually. Total funding is reported at US$50 million, with projects to be operational by end 2025.  In May 2022, it was reported that Corfo had signed agreements with three of the six companies selected.

In June 2023, progressive media reports indicated that Corfo has established a fund of around US$1 billion to facilitate investment in green hydrogen projects. The fund is expected to be launched in the third quarter of 2024 in line with the timing of financial investment decisions of the present pipeline of projects.  The make-up of the fund includes the following contributions:

  • The World Bank has indicated a commitment amount of US$150 million in fiscal year 2023 (with press reports from November 2022 indicating a further US$200 million loan is possible at a later stage).
  • The Inter-American Development Bank in June 2023 announced that it had approved a US$400 million loan to support the development of the green hydrogen industry and its derivatives in Chile.
  • Contributions from the €225 million Fund for Renewable Hydrogen announced by the EU President in June 2023 – media reports indicate €100 million each from the European Investment Bank and the German state-owned investment and development bank KfW would be made available, with the EU providing a top-up of €16.5 million via the Latin America and Caribbean Investment Facility.
  • A contribution of US$250 million from Corfo as reported by media agencies in June 2023

In May 2024, Corfo announced two initiatives to progress hydrogen industry development:

  • the opening of a Request for Proposal for the manufacture and/or assembly of electrolysers and their components in Chile (following a Request for Information in 2023). Corfo would allocate co-financing of up to 60% for each successful project, with a ceiling of US$10 million.
  • presaging the tender for the establishment of The Technological Center for Innovation in Green Hydrogen in the Magallanes Region.

 

Updated: May 2024`