According to experts, a more viable path is to build the industry through smaller-scale projects and then expand toward the export of green fuels.

While two green hydrogen projects in Chile aimed at supplying local industries have already received environmental approval and are moving forward toward implementation, the mega-projects seeking to export the green fuel abroad have encountered difficulties in advancing.

Of the three green hydrogen projects that contemplated investments of over US$10 billion, only two remain. On Friday, AES Andes withdrew from the INNA project, a green hydrogen and ammonia initiative in the Antofagasta Region that had been in conflict with the astronomical community due to its proximity to facilities of the European Southern Observatory (ESO).

In the Magallanes Region, two green hydrogen projects are still standing, but both have faced delays in their environmental permitting processes. In September of last year, the H2 Magallanes initiative led by France’s TotalEnergies extended the deadline to respond to the first Consolidated Report of Requests for Clarifications, Rectifications, and Expansions (Icsara) until December of this year. This project involves an investment of US$16 billion.

Similarly, in October of last year, the HNH Energy project, which entails an investment of US$11 billion, received its second Icsara. The company requested an extension to respond until March of this year.

Smaller-scale projects

The situation is different for smaller-scale projects. The first green hydrogen project in Chile to obtain environmental approval was Susterra’s, an initiative of just over US$400 million aimed at supplying the mining industry in Calama. The company is currently seeking to secure fuel offtake agreements.

The first phase includes a 40 MW plant, with an investment of around US$60 million, which is expected to be operational by 2028. “What we want to do with the first phase is for a Codelco, a Glencore, or another company to be willing to enter into a contract to use this hydrogen. If no one wants to use it, the plant cannot be built,” said Julio Bertrand, managing partner of the company leading the project, in September.

The Volta project by MAE has also obtained environmental approval. It plans to invest US$2.5 billion to build a green hydrogen and ammonia plant near Mejillones. This initiative aims to supply local demand—such as the manufacture of explosives for mining, fuels for maritime transport, and fertilizer production—while also exporting to European and Asian markets.

A different case is HIF’s Cabo Negro project. With an investment of US$830 million, the initiative involves building a plant to produce e-Methanol, e-Gasoline, and e-GL (liquefied gas), which will then be transported to the Cabo Negro Terminal for export. The project received environmental approval in November of last year.

From the local market to the international stage

Given the pace at which the international industry has evolved, experts believe that projects designed for local consumption have a higher likelihood of being implemented.

Eduardo Bitran, an academic at the Faculty of Engineering of Universidad Adolfo Ibáñez, believes that two challenges persist for the international use of green hydrogen: costs and the willingness to reduce carbon emissions.

“When the strategies were formulated, different countries assumed faster and more accelerated cost reductions than those that have actually occurred. And, let’s be clear, in the current geopolitical context, unfortunately, climate action has lost a bit of relevance,” he notes.

In this context, developing a green hydrogen industry on a smaller scale makes more sense. “Today, the immediate stage of green hydrogen in Chile is local demand, precisely because it enables the export industry in the medium and long term. Moving first toward domestic consumption is the most realistic path to building a market, with concrete demand, lower risks, and shorter timelines than purely export-oriented projects in their initial phase,” says Rebeca Poleo, president of the Chilean Hydrogen Association (H2 Chile).

“It is also important to highlight that this stage accelerates the learning curve, matures the domestic market, improves technological know-how, and prepares human capital. In this way, it contributes to the creation of a more robust industry with solid foundations, which can later be scaled up for export,” she adds.

In this regard, the bill that creates tax incentives for the consumption of green hydrogen could catalyze this process. The initiative includes a temporary tax benefit of US$2.8 billion and is currently in its second legislative stage.

“Focusing on generating that incentive for the early players has significant positive externalities for the development of the industry in Chile,” says Bitran. For example, having industrial-scale plants would allow Chilean producers to participate in European Union tenders. “That can be a lever for us to compete globally in these calls,” he adds.