Written by Ian Cardenas, Paralegal
Chile continues to work on the development of its green hydrogen business model. As part of this, CORFO (Corporación de Fomento de la Producción – in English, the Production Development Corporation) has worked to better coordinate the public sector in order to promote the most sustainable growth model for the country and continue to be a forerunner in the field of energy transition.
In the words of Corfo’s executive vice-president, Miguel Benavente, Chile is quite advanced and is a pioneer in regards to use of green hydrogen. However, being a pioneer brings a lot of uncertainties which must in turn be addressed. A key role of the public sector is to be able to mitigate these uncertainties.
Projections for hydrogen
Projections indicate that between now and 2050, 18% of the world’s energy demand will be met by hydrogen. This will require annual investments of 20 to 25 billion euros, 40% of which will be used to produce hydrogen.
In the words of Chilean mining undersecretary Willy Kracht, “emissions reductions will not happen if we do not coordinate efforts. The first thing is to establish a roadmap that allows us to prioritise over the next few years, what we transform first in the mining industry”.
This global transition to sustainable and clean methods is based on the incorporation of new technologies, which are made up of knowledge, materials and energy. Chile is also a supplier of many of these materials. Chile has the elements the world needs to transition to green energy and to have a much cleaner energy matrix and deliver greater social welfare for all.
Opportunities in the energy transition market
It should be noted that the conversion of small and medium-sized machinery and equipment is seen as a potential business niche as part of driving the energy transition. Mining companies have a key role to play in this disruptive market innovation, as the challenges they will face will be to renew their electrical energy contracts, achieve 100% electric underground mining, reduce emissions in our pits by 10%, and promote a green hydrogen market leveraged on mining applications.
Benefits to the economy of decarbonisation through hydrogen use:
- Green hydrogen power generation in gas facilities.
- Hydrogen fuel for heavy transport and commercial use (currently making good progress via mining pilots).
- The use of green ammonia for energy production and other greener chemicals.
Potential challenges for the Chilean market
On the other hand, Chile’s challenges in this area relate to the following:
- lack of spaces and instances of piloting and validation of technologies;
- low level of technological absorption with respect to the energy transition;
- a gap between the intentions to contribute to reducing emissions and the investments needed to do so; and
- lack of sufficient incentives for the sector to invest in manufacturing or reconverting equipment, and the need for training and new professional profiles.
It is very important that these issues are addressed and resolved during the early stages of the energy transition period. This would be an efficient way of converting to synthetic fuels and electromobility. Ideally, emphasis should be placed on accelerating transformation projects and taking advantage of the opportunities offered by technology transfer and innovation in conjunction with local needs and public-private work.