Chile readying US$1bn hydrogen facility as Argentina prepares sector bill

Chilean state development agency Corfo is throwing its shoulder behind the hydrogen ecosystem wheel, while neighbor Argentina is preparing a hydrogen bill.

Those are among Southern Cone takeaways from regional hydrogen conference H2LAC 2024, being held this week in Chilean capital Santiago.

Chile facility 

Corfo is working on several fronts in the sphere of green hydrogen, with a US$1bn financing facility designed to help derisk and reduce the cost of capital for the flagship initiative. 

The facility – built with financing from various multilateral development banks – is the first of its kind globally and is expected to launch this year. Corfo executive director José Miguel Benavente told BNamericas that officials were working on project evaluation logistics and other operational details.

A green light from the office of the comptroller general is also needed

“We hope by the end of the year the counter will be open for the first projects,” Benavente said. 

The likes of derisking solutions could help developers bring in other sources of financing.

Chile is in the global green hydrogen vanguard and sector development is state policy. A 2023-30 action plan was recently published.

Given its multibillion-dollar project portfolio, more initiatives like the facility would help spur the industry along further, Víctor Turpaud, Latin America CEO of e-fuels project developer HIF Global, told the conference. In Chile, HIF Global is planning a utility-scale plant, Cabo Negro, in Magallanes region. A final investment decision could be made in 2026, with production starting by end-2029, delegates heard.

Chile has more than 60 publicly announced green hydrogen projects in the development phase and multiple pilot schemes operating, the biggest among them HIF’s Haru Oni demonstration plant.

Latin America in general holds abundant potential. Among chief hurdles today is getting offtake and financing deals signed. Subsidies of some form, as well as seeking efficiencies and synergies, are deemed vital to help the fledgling industry take flight, given factors such as high costs compared with that of natural gas.  

“I truly believe that Latin America could be the powerhouse of the world. You could replace the Middle East as an energy provider,” said Bart Biebuyck, CEO of developer Green Energy Park, which has a 10GW green hydrogen and green ammonia project in Brazil that could get a final investment decision next year.

In Chile, calls have been made to accelerate sector development to ensure the country does not drop out of the vanguard. The local industry has suggested the State, via mining firm Codelco and national oil company Enap, buys green hydrogen to substitute fossil fuels in their processes. 

Electrolyzers, wind turbines

Meanwhile, elsewhere on the Chilean hydrogen map, Corfo is scheduled to award grants for electrolyzer projects by year-end. Corfo is offering support of up to US$10mn each for projects to build or assemble electrolyzers and their components in Chile. This follows a call for expressions of interest held last year, which drew nine.

Projects seeking grants can be put forward until August 30.

BNamericas was also told Corfo was analyzing the feasibility of launching a similar process for wind turbine components.

In Magallanes region alone, multiple gigawatts of wind and electrolyzer capacity will be needed. Assembling or manufacturing in the country would support growth of local value chains and reduce associated logistics costs, Benavente said.

A role is also seen for energy storage systems at hydrogen plants, a potential market for lithium battery companies awarded rights, by Corfo, to local production for use in value-added projects, BNamericas heard.

In a related battery development, German chemicals giant BASF said earlier in the week it was in discussions with industries in Chile including mining and hydrogen over potentially supplying them with its sodium-sulfur battery solution.

Argentina

The administration of Argentine President Javier Milei plans to present a hydrogen bill next month, delegates heard. 

Undersecretary of energy planning, Mariela Beljansky, told the conference the draft legislation was part of a wider push to overhaul the economy. 

“We’re trying to change lots of things at the same time,” Beljansky said.

Domestically, hydrogen could have a “fundamental role” in decarbonizing some sectors, she said, citing as examples steel and fertilizers. 

On a similar note, Beljansky said the government intended to assign greenhouse gas emission limits by sector, to help decarbonize local industry, and in turn, ensure the competitiveness of Argentine goods on the global market amid the prospects of carbon border taxes.

The role of the State is setting out the rules of the game without overregulation, she added.

Milei has an economic reform bill in congress that includes a promotion regime for large projects.   

“Argentina needs investment now,” Beljansky said. “Someone needs to take the first step.” 

The previous government had submitted a hydrogen promotion bill to congress. Argentina is home to several publicly announced projects and last year published a hydrogen strategy.

An improvement on the macroeconomic front, along with a clear and stable regulatory framework, could help unlock investment. 

White Hydrogen

While the focus of the event was low-emission hydrogen, white, or naturally occurring, hydrogen was part of the discussion agenda. 

Global company Xcalibur Smart Mapping is active in the region and looking to carry out aerial survey work in Chile, Xcalibur business development manager Marco Nieto told BNamericas on the sidelines. 

Countries like the US, Canada and Australia, via public and private initiatives, have launched exploration-phase work.

“Latin America and the Caribbean has a lot of potential,” Nieto said. “In the case of Chile there is a series of rock formations that could have this natural hydrogen, and this needs researching.”

Xcalibur carries out work to identify potential targets for exploration using airborne technologies.

“We’re looking for companies and governments that have these initiatives; there have been expressions of interest, precisely to carry out this exploration work,” Nieto said.