The government proposes that green hydrogen projects in Chile pay 1% of their investment in advance after obtaining the RCA. Experts and unions warn that this measure could affect their financial viability and discourage multi-million-dollar investments.

The government has submitted a bill to the Chamber of Deputies seeking to modify the application of the regional contribution for green hydrogen projects. The initiative establishes that companies must make a lump sum payment equivalent to 1% of their investment in fixed assets immediately after obtaining the Environmental Qualification Resolution (RCA) . This marks a change from the current system, in which this tax is paid once operations begin.

Effects on project viability

Experts warn that the measure could compromise the financial viability of initiatives still in the evaluation phase. Eduardo Bitran , a professor at Adolfo Ibáñez University, told El Mercurio that “it is not appropriate to advance the payment of 1% of the investment in fixed assets, as it could affect the environmental assessment process.” Similarly, Anil Sadarangani , of the Universidad de los Andes, stated that while the measure seeks early benefits for communities , the projects “still do not generate cash flow at that stage, which could strain their financing.”

The regional contribution was established by Law 21.210 in 2020 , during Sebastián Piñera’s second administration, to ensure that a portion of the tax revenue from large projects remains in the regions where they are developed, not just in Santiago. The change now proposed by the Treasury seeks to accelerate this flow of resources , but faces criticism from the industry due to the early stage at which it is intended to be implemented.

The position of the green hydrogen unions

Marcos Kulka , executive director of the Chilean Hydrogen Association (H2 Chile) , stated that the measure is “inappropriate,” given that obtaining the RCA does not guarantee either off-taker contracts or a final investment decision. The association proposes that any advance payment should be made “when construction begins,” a stage in which projects already have financing and commercial agreements, although they have not yet generated profits.

Reactions of foreign investors

TotalEnergies H2 CEO Antoine Liane harshly criticized the initiative, stating that in his case, with a US$16 billion project , the advance would imply US$160 million upon obtaining the RCA , without any guaranteed financing or investment decision. “This encourages us to never have our RCA or to delay it,” he warned, considering that the scheme represents a disproportionate risk for the emerging green hydrogen industry.

When contacted by El Mercurio , the Ministry of Finance did not provide any statements regarding the project or its potential effects on foreign investment. Similarly, HNH Energy and the H2V Magallanes union did not comment. The debate, however, is already mobilizing companies, unions, and experts , who agree that charging a fee at a pre-construction stage could discourage the development of strategic decarbonization projects.