Chile’s Plans for Green Hydrogen

In our previous article, we outlined the carbon emissions reduction goals that the major miners in Chile have committed to over the next decade. We went a step further in our article last week and specifically looked at how Codelco was advancing towards its sustainability goals. 

In order to cut emission further, mining companies will need to look at electrifying their fleets which fits well with Chile’s plan to be a world leader in green hydrogen. Chile’s energy ministry has unveiled a national green hydrogen strategy that aims to turn the country into a world-class producer and exporter by 2040.

Chile will do this by leveraging the low cost of its renewable energy. The country has potential to generate over 1,800GW of renewable capacity, approx. 70 times the country’s current demand. The government expects the cost of clean energy generation to continue dropping over the coming decades. For example, solar energy produced in northern Antofagasta region is expected to fall from a current average of US$25/MWh to about US$10/MWh in 2050. Wind energy costs are projected to drop from around US$23/MWh to US$20/MWh by mid-century.

The roadmap to development would come in three stages, with the first would focus on large-scale domestic consumption through existing demand, for example in refineries. The second stage would spread hydrogen use to the transport sector and exports. The third stage would involve large-scale deployment of export infrastructure.

Recently the Chilean government has announced the  creation of a US$50mn financing round to encourage the development of pilot projects with the hope that it will lead to lower costs over time. The financing is accessible to both local and international players.

Pilot Projects

Oil and gas firm Eni and electric power player Enel are developing two hydrogen pilots, which would each require generation capacity of 10MW and are expected to start operations between 2022 and 2023. Output from the projects would be used initially to feed Eni’s refineries.

Siemens secured financing from the German ministry of energy and economic affairs to move forward with the Haru Oni green fuel project in Chile. The project involves using wind power to produce hydrogen and derivatives such methanol and a carbon-neutral synthetic fuel.

Hydrogen in Mining

Green hydrogen is an important step for miners to reduce carbon emissions in their operations. Using green hydrogen to fuel haulage trucks will be a huge step for miners to improve their carbon efforts.  There is said to be around 1,500 haul trucks operating in Chile. Each day, a truck needs around 3,500l of diesel, consuming the energy 700kg of hydrogen could provide. 

Green hydrogen could also substitute natural gas in the fire refining step during primary copper production, when most of the oxygen is removed from the blister copper before it is cast into anode. This will require further technical research but it is another place the hydrogen could help mining companies reduce their carbon footprint. 

Government promotion agency, CORFO is already supporting three hydrogen-related projects involving the transformation of diesel trucks, the use of hydrogen cells in underground mines, and the design and construction of a hybrid engine prototype with hydrogen-based batteries and cells to be used also in mining trucks.

Conclusion

Although green hydrogen is being imagined as a fuel source for the future, there is still a long way to go. Huge investments in infrastructure, training technical staff, and ensuring there is demand for the new fuel will be required to support its growth. The government is supporting its growth at this early stage but it will take time before it is readably available to industries such as mining and for more broad rollouts to the public. 

ax.legal and Business Consultancy is located in Chile with partners throughout the Latin American Region. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies with their growth and operations in Latin America. 

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal