## CHILE’S BET ON GREEN HYDROGEN

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**Canonical URL:** [CHILE’S BET ON GREEN HYDROGEN](https://www.imf.org/-/media/files/publications/fandd/article/2022/december/chiles-bet-on-green-hydrogen.pdf)

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### Chile’s renewable endowment and ambitions
- Population: "19.5 million people."
- Renewable resources highlighted: "fierce solar radiation in the Atacama Desert," "blustery plains and valleys of Patagonia," "strong ocean currents, geothermal energy, and hydroelectric power from the rivers rushing through the central and southern valleys."
- Lithium reserves: "almost half of the world’s known lithium reserves" located "under the salt flats in Chile’s arid north."
- National commitments:
  - "carbon neutrality by 2050"
  - "pledged to close or repurpose all of its 21 coal-fired power plants by 2040"
- Grid renewable share:
  - "in August this year, 58 percent of the nearly 30,000 megawatt capacity of the national grid came from renewable sources."
  - "That proportion will reach 62 percent next month with several projects coming online imminently."

### Green hydrogen: concept and Chile’s strategy
- Definition and process:
  - Hydrogen production via electrolysis: "To split the molecules into hydrogen and oxygen, a current is passed through water in an electrolyzer."
  - Energy flows: "The energy released is fed into the national grid; the hydrogen is captured, stored, and transported."
  - Uses: "used in zero-emission fuel cells—or combined with carbon dioxide to make synthetic ammonia for fertilizers or methanol as a gasoline substitute."
  - "The 'green' element refers to the source of the energy—in this case, renewable."
- Global context: "The International Renewable Energy Agency estimates that hydrogen will account for as much as 12 percent of global energy use by 2050."
- Current hydrogen production mix: "95 percent of the world’s hydrogen is produced using energy derived from hydrocarbons—known as 'gray' hydrogen."
- Chile’s national strategy goals (presented November 2020):
  - "to be producing the world’s cheapest green hydrogen by the end of the current decade"
  - "to have broken into the top three exporters globally by 2040."

### Projects, private sector activity, and public support
- Enel Green Power Chile activity:
  - "nine wind farms operating in Chile."
  - Haru Oni pilot project targets: "producing an annual yield of 350 tons of synthetic methanol and 130,000 liters of gasoline."
  - Faro del Sur wind farm (planned):
    - Area: "38-square-kilometer"
    - Location: "Cabo Negro, just north of Punta Arenas."
    - Investment: "$500 million"
    - Capacity: "65-turbine facility would generate 325 megawatts of green hydrogen energy"
    - Status: "withdrawn from Chile’s environmental evaluation system recently because of 'exceptional demands.'"
    - Government grant: "$17 million granted to the Faro del Sur project" (part of wider grants below).
- Government financial support:
  - "In December, the Chilean government pledged $50 million in grants to six green hydrogen projects the length of the country, including $17 million granted to the Faro del Sur project."
- Public-private investment projections by the energy ministry:
  - "investment in green hydrogen and other derivatives could reach $45 billion by 2030—and $330 billion by 2050."

### Magallanes potential, scale estimates, and infrastructure implications
- Regional potential estimate (government, 2021): "13 percent of the world’s green hydrogen could eventually be produced using wind energy from Magallanes and Chile’s Antarctic claim—amounting to 126 gigawatts."
- Land footprint estimate (conservationist estimate): "that would require the installation of at least 13,000 square kilometers of wind turbines."
- Local infrastructure constraints:
  - Punta Arenas access: "barring a detour through Argentina, cannot be accessed by land."
  - Most supplies "arrive by boat," and "schools, hospitals, and other services will be stretched by even a modest wave of workforce arrivals."

### Environmental, social, and feasibility considerations
- Conservation concerns:
  - Migratory birds: "wind turbines placed in the flight paths of up to 60 species of migratory birds."
  - Marine impacts: "Dolphin and whale populations could also be affected by an increase in maritime traffic if exports take off."
  - Social and cultural change risk: "Socially, culturally, physically, and economically this place will be unrecognizable."
- Industry view on sustainability and timelines:
  - Need for "defining limits and ways of developing the industry sustainably" as "a job for both the public and private sectors."
  - Enel timeline: "within two to four years, Enel will have a good handle on the feasibility of green hydrogen in Patagonia."

*John Bartlett, CHILE’S BET ON GREEN HYDROGEN (Finance & Development, December 2022).*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2022/december/chiles-bet-on-green-hydrogen.pdf_