Chile's slow progress toward green hydrogen-powered transport

Chile has big green hydrogen ambitions but provides few incentives for development.

One green hydrogen project has obtained environmental approval, while several more have been presented in recent months.

Freight transport company Sotraser has taken steps in this direction by acquiring a tractor-trailer that uses hydrogen fuel cells. In addition, the company has 55 electric trucks and its own 1,200kW/h electric power terminal in Santiago.

To learn more about the prospects for green hydrogen in Chile's transport sector, as well as the obstacles it faces, BNamericas talks to Sotraser's business manager, Claudio Cerda.

BNamericas: How long will it take for the transition of freight transport to using green hydrogen?

Cerda: It's really complicated because hydrogen supply today is very low. 

The hydrogen fuel cell truck that we brought in doesn't have certification, so we have to go through a test period with the transport ministry that involves the hydrogen producer, the means of transport, the company that builds the truck and the one that operates it, in order to create metrics, and the ministry would have to provide the license plate to be able to circulate on the road.

And once that is done, we need to find a way to obtain green hydrogen at a good price. The capex of a hydrogen truck is about three times that of a diesel truck, and the price of fuel must be 10 times higher.

The incentive for a private company like us to do something like this today is zero. Transport is a commodity, and we're one of the 10 largest transport companies in Chile.

We have 600 trucks, but almost 40,000 are circulating throughout the country. The market is very atomized, the barriers to entry to buy a diesel truck and operate it are very low. Therefore, there is zero incentive to adopt these new technologies.

If the state doesn't provide regulations, incentives or subsidies to assist in introducing this, if private companies don't get their act together, and if universities don't support us in the process of technological innovation, it's impossible.

In my view, there's still no well-established synergy between all of them. There are various individual efforts, but there's no connection between them.

One possible example is a project that Walmart did with support from [development agency] Corfo where they partnered with another transport company to bring in a green hydrogen truck. But that effort had more to do with financing than with certification. Therefore, they have to go through the same process as us.

BNamericas: Do you know of any successful examples of green hydrogen public policies?

Cerda: Not in the specific case of trucks. In more general terms, several pilot projects are being carried out. A plant is planned in Magallanes, and a Comasa green fertilizer plant is about to open in Temuco, but the truth is that the main input for producing hydrogen is electricity, and the cost of this continues to rise, and therefore the cost of producing the gas is very uncompetitive.

BNamericas: How do you see the prospects for green hydrogen projects that have been announced recently? Are there concerns about possible atomization in certain regions?

Cerda: This process will begin on a sector-by-sector basis because it's very difficult to transport hydrogen.

If we have to go to Punta Arenas or Antofagasta, we have no problem, and the truth is that it's also important that regions outside of Santiago receive these investments.

BNamericas: What relevance does this transport commodity you mentioned have now that fuel alternatives are appearing?

Cerda: Transportation is a commodity because of the fact that moving a product from one place to another doesn't have many barriers to entry.

What's happening is that lots of companies have decarbonization policies and aggressive goals. For example, there are mining companies that want to be carbon neutral by 2050. And in that sense, the transition in transport becomes relevant, even though the barrier to entry is very high compared with traditional fuels.

For example, our electric power terminal in Quilicura cost almost US$1mn.

BNamericas: A lot of talk relates to the cost of this transition for transport companies, but what's the cost of not doing it?

Cerda: In the short term, it's very low. Although everyone finds electric trucks attractive, capex is more expensive and not everyone is willing to invest, either due to a lack of incentives for the end buyer or because a message is not well expressed so that people value the efforts made by producers and transporters to deliver a decarbonized product.