Is Chile developing green hydrogen production too quickly?

(Author: Yasna Mussa)

The Chilean government has set ambitious plans and goals for developing green hydrogen and developing an industry that it believes holds great promise for the country. Chile has some of the best natural conditions in the world for renewable energy needed to produce gas, and the government says developing the fuel would help the country get on the path to decarbonization.

These benefits have been enthusiastically promoted, but local organizations say the lack of information about these plans and how quickly they are being implemented is worrying.

In May, the administration of Chilean President Gabriel Boric launched the Green Hydrogen Action Plan after consultations with a committee of experts. This set of 80 measures aims to establish social and environmental safeguards as the industry develops, building on plans that former Chilean President Sebastián Piñera unveiled during his second term (2018–2022).

Chile has three main goals for its hydrogen industry: to produce the world’s cheapest green hydrogen by 2030; be among the top three exporting countries by 2040; and by 2025, having 5 gigawatts of renewable capacity dedicated to electrolysis, the process of splitting water using electricity used to produce “green” hydrogen.

A 2020 study commissioned by the government found that green hydrogen development should create at least 94,000 jobs by 2050. During the May presentation of the Green Hydrogen Action Plan, President Boric said: “We want to position ourselves as one of the most competitive producers in the world and become the leading exporter by 2040.”

For government and industry, much of this potential lies in the southern Magallanes region. A study by the Chilean Ministry of Energy shows that wind energy can be used to produce as much as 13% of the world’s green hydrogen.

The Association of Green Hydrogen Producers in Magallanes (H2V Magallanes) reports that investments in nine projects have already started in the region.

The green hydrogen race

The economy of Magallanes is currently driven by cattle ranching, the fossil fuel industry, tourism and fish farming. However, its location as the southernmost and one of the least populated regions of Chile may be ideal for the development of green hydrogen: the most recent census from 2017 showed that its large area of ​​132,297 square kilometers is inhabited by 166,533 inhabitants.

Anahí Urquiza, PhD in natural sciences and member of the strategic committee of the Green Hydrogen Action Plan, explains the attractiveness of Magallanes: “These are places that have a very good quality of renewable energy potential, but also large areas where wind farms can be installed or solar panels.”

Dialogue Earth talked to Ana María Ruz, executive director of the Green Hydrogen Industry Development Committee, created on the initiative of the government’s Production Development Corporation (Corfo). Ruz echoes Urquiza: “A vast area is available, much of it remote from major urban centers… Magallanes winds show (efficiency) factors – that is, the percentage of time the plant generates power – close to 60%, which is even higher than in (European) North Sea parks.”

To achieve green hydrogen production goals in the region, authorities plan to redevelop the Gregorio Marine Terminal, the world’s southernmost oil refinery. The Chilean National Petroleum Company (ENAP) and six international energy companies have signed a contract for the 2023 project.

Another project intended for San Gregorio is the Haru Oni ​​power plant, which would be operated by the energy company Highly Innovative Fuels. Harnessing the consistently strong winds in the Strait of Magellan via turbines, this energy would power electrolyzers that split water into its components: oxygen and hydrogen. This green hydrogen would then be combined with carbon dioxide to produce synthetic methanol, which is the basis of electrofuels, or e-fuels. (For example, e-diesel can be used in transport). Currently, Haru Oni ​​is in the pilot phase and may be one of the first operational e-fuel power plants in the world.

According to Corfo, companies from Spain, Belgium, Italy, the United States and China are interested in production plants in Chile. In October 2023, President Boric paid a state visit to China during the Third Belt and Road Forum, during which the exchange of technology and innovation was an important topic. The Chilean delegation included H2V Magallanes CEO, María Isabel Muñoz.

The Dialogue Earth project consulted Paulina Ramírez, a researcher at the University of Chile’s Energy Center, who also works on projects related to the Green Hydrogen Action Plan. He emphasizes how important it is for the country to become a pioneer in the emerging industry: “This is an opportunity worth taking advantage of at a time when competition is still taking shape.”

Part of the challenge with green hydrogen, Ramírez explains, is adapting and developing the necessary infrastructure and equipment. “In Chile, we have the ability to handle the entire value chain internally,” he adds.

Like any risk, Chile’s green hydrogen plans come with risks: success will depend not only on national progress, but also on global demand trends. Ramírez, however, believes that early action will be rewarded. “The first country to achieve mass production and sign a contract with another country will be the one to secure the market,” he says. “It’s a competition after all.”

A new “victim zone”?

While green hydrogen investments are coming thick and fast in Magallanes, they are being built in conjunction with environmental concerns.

Gregorio Marine Terminal takes its name from the bay and wetlands of San Gregorio on the northern coast of the Strait of Magellan, an area of ​​enormous biodiversity. Tidal characteristics and freshwater wetlands make the area rich in algae and attractive to a variety of bird species, including the endangered red kanquén.

Local civil society groups, scientists and experts fear that while the dominant narrative about green hydrogen emphasizes its displacement of fossil fuels, its large-scale production may require large tracts of land and may involve sacrificing ecosystems – which they believe is not entirely this is what happens. “green.”

Such sacrifices have already been made in the name of industry in Chile, including: in the bay of Quintero-Puchuncaví in the central region of Valparaíso. Its industrialization began in the 1960s, when thermoelectric energy, chemical energy and petroleum were extracted in the area. Subsequent pollution had a direct impact on the health of local inhabitants and their ecosystems, and such areas were called “victim zones”.

The role of water in green hydrogen production was another cause for concern, as regions of Chile that have been earmarked for green hydrogen development lack essential supplies of fresh water. This resulted in the planning of strategies for several projects involving the treatment of salt water. According to a recent report by the International PtX Hub, the German government’s green hydrogen initiative, the Chilean green hydrogen industry will consume 107 million cubic meters of desalinated water annually by 2030.

“Desalination plants also have a big impact,” explains Urquiza. “Especially if it is designed on a large scale, as in the case of Magallanes. This would undoubtedly have a huge impact on the environment and society, as it means transforming the region in which large ports need to be built, traffic increased and a large migration of workers to these territories needed.”

Urquiza cautions that green hydrogen should not be seen as a “silver bullet” but rather as an alternative requiring investigation; If green hydrogen production is not developed sustainably, this emerging industry will thwart its own environmentally positive goals, he says.

Community interventions

“The truth is that the green hydrogen industry in the Magallanes region is already established,” says marine biologist Gabriela Garrido, who is also part of the Magallanes Citizens’ Panel on Hydrogen, a region-wide network of environmental and scientific organizations. Garrido is concerned that there are already companies in the region with projects already underway. He says they have been collecting information and monitoring for the past three years, regardless of whether these projects will ultimately be approved by the state environmental impact assessment service.

In December 2023, a coalition of regional and national organizations signed an open letter to the government imploring President Boric not to create a new “victim zone” in Magallanes. The letter points out and rejects “the way the government and private companies are promoting the development of a ‘green’ hydrogen industry across the country, with the cases of the Magallanes region and Chilean Antarctica being of great concern.”

Garrido says the industry “is already putting pressure on this territory in social, media and political terms, and is also intervening in towns and municipalities that are extremely vulnerable, where it is very easy to arrive with a briefcase full of hope and money.”

This pressure has translated into the presence of specialists sent by companies already operating in Magallanes, says Garrido, adding that they try to exert influence in various areas: in district councils, cultural committees, donating gifts to schools, e.g. greenhouses, as well as through talks and other types of services. “They interfere with the social fabric,” he says.

The Magallanes Citizens’ Panel on Hydrogen is concerned about such interventions in these isolated communities, which Garrido says are usually neglected by state and regional governments; the opportunity to create jobs and invest in local public services is inevitably welcome. – These are communes that have deficiencies in electricity, sewage, internet, education and health – he explains. “When you come with promises like that, it’s very easy to charm.”

Companies represented by the hydrogen association Magallanes did not respond to questions from Dialogue Earth. Corfo’s Ana María Ruiz said the green hydrogen action plan takes into account broad public participation in Magallanes and that not everyone is against the industry. She said the industry was developing in a “planned and orderly” way, taking into account social and environmental aspects, adding local value.

Urquiza realizes that Chile’s green hydrogen ambitions are based on uncertainty and underdeveloped technologies: “There are several problems that have not been solved in order to reduce the costs of energy production so that it is profitable and can effectively influence the energy transition in different sectors.”

Garrido shares these technical concerns: “The problem arises from the fact that this way of attacking the decarbonization of the energy mix is ​​not yet technologically feasible.”

In line with its Green Hydrogen Action Plan, the Chilean government will establish the necessary social, environmental and labor standards for the industry by 2026. President Boric expects to confirm 10 to 12 green hydrogen projects for the industry before his term ends at the end of 2025 country.

Yasna Mussa is a Chilean freelance journalist whose work has been published in the New York Times, Washington Post, La Tercera, El País and Radio France International, among others. She is the co-founder of Revista Late.

This article was published courtesy of Dialogue Earth and can be found in its original form here.