Santiago — Chile, the world's largest producer of copper, could one day be exporting as much as green hydrogen as it does minerals, according to a top government official.
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Speaking during a webinar, Energy Minister Juan Carlos Jobet said that by harnessing renewable energy the South American country could be producing 25 million mt/year of green hydrogen by 2050, generating exports worth more than $30 billion.
The figures are from a report by management consultants McKinsey.
"This is the equivalent to the whole copper industry, which is today 10% of GDP and half of our exports," Jobet said.
In 2019, Chile exported $33 billion worth of copper, equivalent to around 50% of its total exports. It is by far the world's largest exporter of the metal, accounting for more than a quarter of global mine output.
The Chilean government is wagering that green hydrogen could transform its economy and turn the South American country, which currently is heavily reliant on fossil fuel imports, into a player in the global market for the fuel which many see as a key part of the solution to climate change.
Chile offers helpful conditions for renewable energy, especially along its windswept coasts and in the sun-drenched Atacama Desert, which offers the world's highest levels of solar radiation.
With almost $23 billion worth of wind, hydroelectric and solar projects in development, the country is expected to source 70% of its electricity from renewables by 2030, up 44% from last year. But the country could potentially produce a great deal more, up to 70 times more power from renewables than its entire energy grid, according to some estimates.
This could allow Chile to produce hydrogen free of emissions at a much lower cost than rival producers, the minister said.
Citing the McKinsey report, the minister said production costs of just $1.40/kg, compared with $2.20/kg in Australia, would make Chile a highly competitive player that could grab a significant market share in China, Japan and South Korea despite higher transportation costs.
"Our generation costs are so low that they more than compensate for the distance we have with the markets," Jobet said.
Chile's position could mean it could supply markets in North America and Western Europe as well as Asian consumers, the minister said.
As well as creating a major new export industry and reducing the country's reliance on volatile copper prices, green hydrogen could also transform existing industries including mining, forestry and agriculture, he said.
Chile's mining industry, which consumes a third of the country's power, is rapidly switching to electricity produced from renewable sources to reduce its costs and bolster its environmental credentials. But mining companies still rely on giant trucks to haul ore and waste that can consume 2,000 liters of diesel a day, the minister said.
In the future, these could run on hydrogen.
Several companies, including Italian energy group Enel, are working on pilot plants to produce hydrogen in Chile. In order to support investors, the government is studying gaps in the country's regulations for green hydrogen production that it hopes to begin closing during the second half of the year, Jobet said.