Chile's c-bank optimistic about green hydrogen's economic potential

The Central Bank of Chile has endorsed the domestic green hydrogen sector, stating that even the few existing projects, should they materialise, have the potential to positively impact Chile’s long-term economic growth.

Due to this potential, the Central Bank incorporated these projects into its non-mining trend GDP growth projections in the September 2024 monetary policy report. As more green hydrogen projects move forward from the design phase, the non-mining trend GDP outlook will be adjusted to reflect these new investments, Chile’s Central Bank said in a blog post on Monday.

Do you know we have a daily hydrogen newsletter? Subscribe here for free!

According to the monetary policy authority, there are currently five green hydrogen projects seeking evaluation of the environmental impact, suggesting their high level of maturity. Two are located in the region of Magallanes and Chilean Antarctica, two are in Antofagasta, and the remaining one in Valparaiso.

If realised, these five projects combined would generate investments estimated at roughly USD 15 billion (EUR 13.6bn) and produce over 300 kilotonnes of green hydrogen per year, according to the Central Bank’s research.

There is a significant number of announced projects, but they are not fleshed out enough to be submitted into environmental permitting, the Central Bank said. Chilean hydrogen association H2 Chile lists 64 projects in different stages of development based on public announcements, as of its December 2023 update.

The Central Bank reiterates what is already known about Chile’s green hydrogen potential -- the country can generate far more renewable energy than it needs and can deliver green hydrogen at a cost of USD 1/kg by 2030. While the projected high demand in the carbon-neutral scenario is a great incentive for Chile's existing and new projects to advance, the Central Bank warns that there are other countries in the world that have comparable advantages. These countries are also being considered as possible destinations for large-scale green hydrogen projects.

(USD 1.0 = EUR 0.906)