Hydrogen law, regulations & strategy in Chile

Chile is positioning itself as a global leader in green hydrogen production, leveraging its abundant renewable energy resources. With over 50 green hydrogen projects in development, particularly in regions such as Antofagasta and Magallanes, Chile is capitalising on its solar and wind potential to create hydrogen. These projects are central to the country’s broader strategy to achieve carbon neutrality by 2050.

Chile’s green hydrogen production includes several high-profile projects currently underway:

• Haru Oni Project: Located in Magallanes, this synthetic fuels project is led by HIF Global and supported by AME, EIG, Baker Hughes, Gemstone Investments, Porsche, Siemens Energy, Gasco, Empresa Nacional de Petroleo (ENAP), Exxon Mobil, and Enel.
• HyEx Project: Situated in Antofagasta, this project aims to produce green hydrogen from solar energy for the mining industry, developed by Engie and Empresa Nacional de Explosivos (Enaex).
• Enel Green Power Projects: Enel is developing multiple green hydrogen projects across northern and southern Chile, significantly contributing to the country’s overall production capacity.

Domestic consumption of green hydrogen is being promoted through various initiatives, such as an Emissions Trading System (ETS) and tax incentives. These measures aim to create a robust internal market for green hydrogen, particularly in the transport and heavy industry sectors. A pilot project in Coquimbo and La Serena is already supplying green hydrogen to 2,000 homes and businesses, contributing to a reduction in CO₂ emissions (Gasvalpo spearheads hydrogen blending in Chile gas network - H2 Bulletin).

Chile is in the early stages of developing hydrogen pipeline infrastructure. The government is focused on creating regulatory frameworks and strategic infrastructure planning to support the hydrogen value chain. Efforts include potential investments in pipeline networks to transport hydrogen from production sites to consumption areas, both domestically and for export.

Efforts are underway to develop storage solutions for green hydrogen, including both large-scale and smaller, decentralised systems, to ensure a stable supply. The government is also exploring innovative storage technologies to enhance the reliability and efficiency of hydrogen as an energy carrier.

Chile has introduced several policy changes to support the development of its green hydrogen industry, aiming to create a favourable investment environment, streamline regulatory processes, and encourage the adoption of green hydrogen technologies. A central element of these changes is the Green Hydrogen Action Plan (April 2024), which outlines specific actions to accelerate the deployment of green hydrogen. Further details of these actions are provided in Section 3 under recent developments (Energía 2050 - Política Energética de Chile | Ministerio de Energía).

Decarbonisation Plan

Chile’s decarbonisation plan is to reduce greenhouse gas emissions across all sectors. The plan includes a phased retirement of coal-fired power plants, with a full phase-out by 2040. This transition will be supported by investments in renewable energy sources, such as solar and wind, to replace fossil fuels and secure a sustainable energy future (Plan de Descarbonización | Ministerio de Energía).

Climate Change Framework Law

Enacted in June 2022, the Climate Change Framework Law legally commits Chile to achieving net-zero emissions by 2050 (Ministerio del Medio Ambiente publica la Ley Marco de Cambio Climático en el Diario Oficial – MMA). The law establishes a governance structure that decentralises climate policy implementation across 17 government ministries and regional authorities. It also introduces sectoral carbon budgets, emissions standards, and financial strategies to support climate action. On the international stage, Chile is a signatory (UNTC) to the Paris Agreement (ADOPTION OF THE PARIS AGREEMENT - Paris Agreement text English). The country’s nationally determined contributions outline specific targets and measures for reducing emissions and adapting to climate change impacts.

National Green Hydrogen Strategy (2020)

Launched in 2020, Chile’s National Green Hydrogen Strategy aims to position the country as a leading producer and exporter of green hydrogen (Estrategia nacional de hidrógeno verde | Ministerio de Energía). The strategy’s key objectives include producing the cheapest green hydrogen by 2030, becoming one of the top three exporters by 2040, and developing 5 GW of electrolysis capacity by 2025. Chile’s abundant renewable energy resources serve as the foundation for driving the green hydrogen industry forward.

Green Hydrogen Action Plan (2024)

The Green Hydrogen Action Plan outlines specific actions to accelerate the deployment of green hydrogen, including economic incentives, regulatory reforms, and infrastructure development. Key components of the plan include:

• Allocation of Public Lands: Assigning and managing public lands for green hydrogen industry development, ensuring territorial compatibility and economic feasibility.
• Strengthening Chilean Economic Development Agency's (CORFO)  Promotion Instruments: Addressing financing challenges for technological and productive development within the green hydrogen value chain.
• Boosting Domestic Demand: Implementing an Emissions Trading System (ETS) to stimulate domestic hydrogen demand and promote zero-emission alternatives.
• Tax Incentives: Introducing tax credits for investments with high multiplier effects, including green projects, and updating the R&D tax incentive law to support sustainable projects.
• Financial Instruments: Creating a financial facility to attract private investment, with state backing and support from multilateral banks.
• Regulatory Enabling: Launching a work plan for enabling regulations, including specific regulations for seawater desalination.
• Permitting System: Strengthening services for critical permits and promoting comprehensive sectoral permit reform to improve efficiency and predictability.

RECENT DEVELOPMENTS

The Facility and Chile-UK Agreement

In June 2023, Chile launched a US$1 billion fund to catalyse private investments in green hydrogen projects (Gobierno presenta Fondo por US$ 1.000 millones para el desarrollo del Hidrógeno Verde en Chile). This initiative aims to attract a total investment of US$12.5 billion and is backed by international organisations such as the World Bank and the Inter-American Development Bank. The fund will help mitigate risks, reduce costs, and accelerate green hydrogen projects in Chile.

In September 2024, the UK and Chile governments launched a partnership to unlock new financing for the green hydrogen sector, with over £5 billion available in UK export credit support including, to support loans in Chilean pesos (UK-Chile agreement paves way for green hydrogen exports - GOV.UK). This partnership seeks to enhance liquidity in Chile’s renewable energy sector and create export opportunities for UK cleantech businesses. The agreement follows the UK government’s announcement of a National Wealth Fund, which includes £500 million for green hydrogen manufacturing projects.

Chile has also committed US$50 million to advance green hydrogen production (Chile adjudica usd$50 millones para proyectos de hidrógeno verde | Ministerio de Energía). As part of this, five projects received Chile’s first green hydrogen industry subsidies through a programme developed by CORFO. The US$50 million allocated will co-finance the installation of electrolysers. Of the 12 proposals submitted, six were selected, with five already in advanced stages of development. These projects—led by Enel Green Power, Engie, Air Liquide, GNL Quintero, and CAP—will be located in the Antofagasta, Valparaíso, Biobío, and Magallanes regions. To qualify for reimbursement, these projects must begin operations by the end of 2025.

Building on this momentum, Chile plans to launch a Request for Proposal (RFP) to attract national and international companies to establish an electrolyser manufacturing and assembly industry in the country. This follows an earlier Request for Information (RFI) by CORFO, which identified key conditions for fostering such developments. The RFP aims to support sustainable industrial growth and accelerate green hydrogen initiatives critical to Chile’s decarbonisation goals and a just energy transition.

Permitting

Chile’s Green Hydrogen Action Plan outlines several strategies to streamline the permitting process for hydrogen projects. Key actions include:

• Strengthening Public Services: Enhancing the capacity of public services responsible for issuing critical permits for hydrogen projects, with an emphasis on regional implementation.
• Sectoral Permit Reform: Promoting comprehensive reform of sectoral permits to improve standardisation, efficiency, proportionality, predictability, and institutionalisation, with the goal of reducing project authorisation times by 30%.
• Environmental and Technical Guidelines: Updating guidelines for presenting hydrogen projects to the Superintendency of Electricity and Fuels (SEC) and developing technical criteria for environmental evaluations.
• Strategic Certification Proposal: Developing a strategic proposal for a sustainability certification system for hydrogen, ammonia, and other synthetic fuels in Chile. This will ensure compliance with import requirements in Europe (particularly Germany), Japan, South Korea, and other countries. The proposal also aims to promote a harmonised certification scheme for hydrogen and its derivatives, tailored to the specific requirements of Latin America and the Caribbean.

Tax Incentives

The Green Hydrogen Action Plan includes several tax incentives to support the development of the green hydrogen industry:

• Tax Credits for Investments: The plan introduces a tax credit fund for investments with high multiplier effects, including green projects. Companies that develop production projects promoting new technologies and/or the decarbonisation of the productive matrix, such as electromobility, renewable energy, and green hydrogen, are eligible for these credits.
• Income Tax Reduction: The plan reduces the first-category income tax rate to 25% and establishes a 2% tax under the general taxation regime for companies. This tax can be deducted through investments that enhance productivity, such as acquiring high-tech equipment.
• R&D Tax Incentives: The plan strengthens the R&D tax incentive law (Ley I+D) by tripling the upper tax credit threshold and increasing the tax credit amount to 50% for projects aligned with sustainable development, such as green hydrogen and its derivatives. This law provides tax deductions for private investments in research and development, encouraging innovation and technological advancement in the green hydrogen sector.