Written by Ian Cardenas, Paralegal
Chile, a high-income industrialized economy with more than 19 million inhabitants, could offer global powers a textbook for the transition to renewable energy.
In recent years Chile has been able to accelerate its energy transition thanks to broad political support, public-private partnerships, and innovative green technologies. It has also set itself the ambitious target of converting 70% of its total energy consumption to renewables by 2030 and has committed to becoming carbon neutral by 2050. The country is also building on its role as a global leader in renewable energy and using this to address gender inequalities at home.
Public-private partnerships and green hydrogen
Public-private partnerships have been key to accelerating Chile’s energy transition, especially for the country’s green hydrogen market. As discussed in other blogs, green hydrogen (a clean energy source that splits water into hydrogen and oxygen using renewable electricity) is at the heart of Chile’s energy transition.
Chile’s National Green Hydrogen Strategy calls for incorporating green hydrogen into the country’s mining and feedstock sectors, as well as other local carbon-dependent supply chains.
The strategy estimates that Chile’s green hydrogen could be among the most affordable in the world due to its favorable renewable energy environment. This predictable supply of wind and solar energy has led the Chilean government to estimate that 13% of the world’s green hydrogen will be produced within its borders.
Lithium and its potential in Chile
This light metal is essential for the manufacture of electric vehicle batteries and is currently the most sought-after of all Chile’s minerals, with the exception of copper. The country is also a major producer of iodine and potassium.
The South American country is the world’s second largest lithium producer after Australia and holds approximately 45% of the world’s lithium reserves, which means that new business opportunities will emerge in the coming years.
Lithium production in Chile is concentrated around the Salar de Atacama, which is home to one of the most contested lithium reserves on the planet and is the production centre of the country’s two lithium-producing companies, Albemarle and SQM. Chile produced 162,477 tons of lithium carbonate equivalent in 2021. Future demand forecasts for lithium, along with the development of electricity storage infrastructure and electromobility solutions, have attracted investors’ attention to the mineral.
A study by the Pontificia Universidad Católica de Chile and the engineering firm Dictuc calculated the carbon footprint (i.e. greenhouse gas (GHG) emissions) of the two operations in the Salar de Atacama. The study found that GHG emissions per unit of lithium produced from brine extraction at the Salar de Atacama in 2020 amounted to 4,022 kg CO2 equivalent per ton of lithium carbonate. Of this total, unit emissions from the Salar de Atacama operation account for 12%, while chemical plant processes account for the remaining 88%.
Car and battery manufacturers already require low-carbon inputs, with this demand set to increase in the future as our impact on the environment becomes an increasingly motivating factor for business and consumers. For this reason, mining companies expect demand for lithium to continue increasing.
Chile’s international role
Chile is leveraging its progressive renewable energy credentials to establish itself as a major diplomatic player in international climate negotiations and the transition to sustainable energy.
It has also strengthened bilateral and regional partnerships to boost green technologies and reduce carbon emissions. In this way, the country is seeking to be a leader in the field at the international level to attract investors. One of Chile’s most active partnerships in renewable energy is with Germany. Chile has also established strong public-private ties with the United States.
