Chile seeks to turn solar boom into green hydrogen bonanza

“Chile could export $ 30 billion in green hydrogen by 2050,” said Juan Carlos Jobet, the country’s energy minister. “This is the amount of copper that

Less than a decade ago, energy companies scoffed at Chile’s willingness to develop its renewable energy sector, dismissing it as too expensive, even though the Andean country enjoys one of the best sunny conditions in the world. world.

Since then, a green technological revolution has lowered the cost of producing solar energy by 80%, and renewables now represent 44% of the mix in a country that no longer depends on imported energy.

Chile now hopes this will allow it to achieve a similar feat with green hydrogen, a clean alternative to fossil fuels that – unlike solar and wind power – can be used at any time of the day or night and in all weather conditions.

Green hydrogen is made from electricity from renewable energy to electrolyze water, separating hydrogen and oxygen atoms. As a fuel, hydrogen produces zero emissions and can be used in fuel cells or internal combustion engines in cars, buses, ships, and even spacecraft.

“Chile could export $ 30 billion in green hydrogen by 2050,” said Juan Carlos Jobet, the country’s energy minister. “This is the amount of copper that we export today.”

Copper is the current backbone of the mining nation’s economy, accounting for around half of its exports, with huge demand from China.

Mr Jobet said green hydrogen has the potential to be ‘transformational’ for the Chilean economy, with a huge impact on job creation and local economic development, stressing the need to diversify the economy from his country and reduce carbon emissions in its mining sector to comply with Paris. climate goals.

McKinsey estimates that global investment in green hydrogen – both the electrolysers needed to produce it and the renewable plants to run electrolyzers – is expected to reach around $ 500 billion by 2030 and $ 2.5 billion by 2050.

“These are very, very important numbers, and Chile needs to find a way to capture some of that investment,” Jobet said. “But even if it was half of that, it would be huge.

For this to happen, progress will be needed in countries that develop technology such as the United States, Germany, Japan and the United Kingdom to bring the cost of production down to economic levels.

The government’s goal is to produce green hydrogen for less than $ 1.50 per kilogram by 2030, a price that would be very competitive in international markets and allow the country to substitute for other fuels.

Hans Kulenkampff, president of H2Chile, the country’s green hydrogen association, said an inflection point could be reached as early as 2027. However, he warned that this would require heightened awareness and understanding of the the country’s potential, especially in the mining sector where the government hopes the technology will be deployed first, with a focus on the huge diesel trucks used to transport the rocks.

“In principle, anything is possible but it has to be stepped up and it is a question of capital expenditure”, said Mr Kulenkampff, adding that this required “an active state to solve the problem of the chicken and the egg. “between supply and demand.

“The question is who is paying for the investment, who is paying for the energy transition. . . we have to solve this and it is not easy, ”he said, pointing out that while Germany, for example, had already earmarked $ 9 billion to promote green hydrogen, developing economies like Chile also faced pressing social problems. The country suffered a wave of protests over inequality last year.

So far, Chilean mining groups have been “timid” in their response to green hydrogen, according to Eduardo Bitran, former president of the Chilean development agency Corfo.

However, he said more than 65 companies from all industries – including big energy players such as Siemens, Enel and AES – were involved in talks to promote the technology. He added that there were already around 20 green hydrogen pilot projects in the country, including feeding forklifts for Walmart and a joint venture between state explosives agency Enaex and French utility Engie. to make green ammonia for miners.

Sebastián Carmona, director of corporate innovation at Codelco, the dominant state-owned mining group in Chile, said the company had high hopes for this technology, having taken “pioneering steps with the introduction of electric mobility. in our underground mines and transport ”.

But as the group examined the use of hydrogen combustion cells in truck engines, it said a “careful” assessment of energy and water needs, as well as production and storage costs, would be needed. necessary.

Roberto Muñoz, director of energy at Antofagasta Minerals, Chile’s largest private miner, said the company is “constantly” monitoring the development of clean technologies, with one of its largest mines, Los Pelambres, la more advanced in the study of the use of green hydrogen.

But he said more work was needed to establish economic viability and security, adding that it could still take “several years” before the technology is available on the market.

Mr Bitran insisted that it was “obvious” for miners and others to embrace green hydrogen given the potential to improve public acceptance of mining and also tendency to increase taxes on polluting companies – in particular cross-border carbon taxes which penalize “environmental dumping”. .

Nonetheless, he underlined the importance for the state to play a catalytic role and correct market failures, with a necessary boost from the supply side.

“There is a lot to do, there is a huge opportunity, there is a lot of political will and also a lot of interest from private actors,” Jobet said. “I am convinced that governments can create the conditions and provide regulatory signals, but ultimately it will be done by the private sector. . . who realized that their carbon footprint is increasing every day.