For years, experts have forecast that green hydrogen—hydrogen that is made using renewable power rather than fossil fuels—could go a long way in displacing the carbon-based energy sources whose widespread use is driving climate change. But currently, the vast majority of commercial hydrogen is manufactured using natural gas, a process that is relatively cheaper but generates greenhouse-gas emissions.

Chile and Brazil are hoping to become world leaders in changing this state of affairs by tapping abundant South American renewable power sources—in particular wind and solar energy—to split water electrolytically into hydrogen and oxygen. Proponents in both countries say green hydrogen will become not only an important source of clean power for their economies, but also of foreign exchange as they sell it abroad to satisfy rising world demand for clean energy.

In each country, the first major green-hydrogen plants are now coming online. Green-hydrogen production began in Chile in December at a site near the Patagonian city of Punta Arenas, the country’s southernmost city. The US$74 million Haru Oni plant is owned by Highly Innovative Fuels (HIF), a global carbon-neutral fuels company based in Santiago, Chile, and the project’s lead developer.

The plant is producing the green hydrogen in the pilot phase of what project partner Siemens Energy is billing as “the world’s first integrated, commercial, industrial-scale hydrogen plant for making synthetic climate-neutral fuels.” To do so, it is drawing power from a 3.4-megawatt wind turbine adjacent to the plant, and more electricity will come from a wind farm HIF is planning in partnership with Enel, Chile’s largest electric utility.

In making efuel, Haru Oni is combining the green hydrogen it produces with carbon dioxide. Biogenic carbon dioxide is being used in the pilot phase, but later this year the plant will obtain its carbon dioxide through direct air capture, project organizers say.

Initially, the plant is producing egasoline for the German automaker Porsche, which has agreed to buy the efuel to power its racing cars as well as the sports cars that paying customers can drive at the company’s “experience centers” around the world. At a Dec. 20 ceremony to celebrate the start of production at Haru Oni, a Porsche 911 was driven around the project site after its tank had been filled with some of the plant’s first synthetic fuel.

“We will be providing certainty for a much more sustainable future,” Chilean Energy Minister Diego Pardow said at the ceremony. “And HIF’s Haru Oni plant has that symbolic value, one that allows us to look at a future in which other forms of energy are possible. We need these moments of optimism at a time when so many forces are holding us back from our climate goals.”

Siemens Energy has stated on its website that the plant eventually will sell emethanol and other products with the goal of providing carbon-neutral fuel for uses such as powering ships and planes. HIF and Siemens say efuels are ideal near-term replacements for fossil fuels since they can be used in current-day engines.

Project organizers say they expect to reach the plant’s pilot-phase production capacity of 130,000 liters (34,000 gallons) of efuel annually by March. They forecast capacity will be expanded in the future to 550,000 liters (145,000 gallons) annually.

Among the most important project components are southern Chile’s strong winds, source of the renewable power needed to drive the hydrolytic production of hydrogen. Siemens Energy calculates that a wind turbine at the Haru Oni project site, located in Chile’s Magallanes region not far from the Strait of Magellan, can generate up to three times the amount of electricity as a wind turbine in Germany can.

Patagonia is one of the world’s windiest regions, with two of its cities—Punta Arenas, Chile, and Rio Gallegos, Argentina—regularly near the top of the rankings of the world’s windiest. Punta Arenas has ropes strung at busy street corners to prevent pedestrians from being blown into traffic.

The wind farm HIF is planning jointly with Enel is slated to be built about 15 kilometers (nine miles) south of Haru Oni at Cabo Negro, in the northern portion of Punta Arenas. Named Faro del Sur, the project is expected to involve the investment of US$500 million and the installation of 65 wind turbines that together will have a generating capacity of 325 megawatts. In the meantime, green power for the plant will come from the existing 3.4-megawatt turbine, which is owned by Enel.

The Haru Oni project has stirred excitement in Chile, where elected officials across the political spectrum support the vision of their country becoming a leader in green hydrogen worldwide. It is not Chile’s only green-hydrogen project; there are some 45 others in the works, according to H2 Chile, a nonprofit association promoting green-hydrogen production in the country. (See “Chilean green-hydrogen advocate discusses progress to date”—this issue.)

Chilean officials say at least six projects are being co-financed by the government and are scheduled to be online by 2025. Collectively, the plants will be capable of producing over 45,000 tons of green hydrogen annually, which would represent a reduction of CO2 output by 600,000 tons a year.

These plants include a French-owned facility in the northern city of Antofagasta that will produce green hydrogen for use in the manufacture of carbon-neutral ammonia. Another plant planned in the same city will produce green hydrogen to enable ethanol output of 60,000 tons annually. The other three government-cofunded plants are slated for the Valparaíso and Biobío regions, but it is not clear what the end-use of their green hydrogen will be.

Currently, the global green hydrogen market is in its infancy, as the fuel’s production cost is still high. But Chilean officials argue their country can produce green hydrogen more cheaply than other nations, citing not only the abundant wind resources in the south but also the extraordinary solar-energy potential in the Atacama Desert.

If all goes to plan, they say, the nation’s green-hydrogen sector by 2050 could match the sales of its copper industry, long the country’s top export-earner. And Chile’s large mining sector itself could become an early domestic customer. Chile’s main economic-development agency (Corfo) is investing in projects to use green hydrogen as a means of powering mining trucks and providing electricity inside mines.

Tatiana Alegre, general manager of HIF in Chile, says the optimism is well-founded.

“We chose Magallanes because of its strong and constant winds, which allow us to generate renewable energy at very competitive prices,” says Alegre, whose company is developing similar projects in the United States and Australia. “Chile can be a pioneer in its development due to its excellent renewable-energy capacity, with solar in the north and wind in the south, and its proximity to the sea for export.”

Despite their climate-friendliness, green-energy projects still attract environmental scrutiny, and Haru Oni is no exception. In October, HIF and Enel temporarily pulled the Faro del Sur wind-park project from the environmental-impact review process, complaining that the government was imposing “exceptional requirements.”

Magallanes environmentalists say the planned wind farm would occupy an area that includes critical habitat for endangered bird species such as the Ruddy-headed goose (Chloephaga rubidiceps) and the Magellanic plover (Pluvianellus socialis).

“We are not opposed to this technology, and we believe it is necessary to promote decarbonization,” explains Diego Luna Quevedo, Chilean representative of Manomet, a U.S.-based nonprofit focused on conservation science in North and South America. “But here in Magallanes, decisions have been made by the government from the top down, without local participation, without land-use planning and without a strategic environmental assessment.”

Green hydrogen underway in Brazil, too

Brazil, which also aims to be a global player, is due to get its first plant capable of commercial-scale green-hydrogen production by early 2024. One of the country’s largest chemical companies, Unigel, plans to use wind energy provided by third parties to power the US$120 million plant, which is now under construction at its Camaçari petrochemical complex in the northeastern state of Bahia.

Initially all the green hydrogen that the plant manufactures will be used to produce so-called green ammonia, project participants say. Ammonia, which worldwide is put to a variety of industrial uses, a chief one being fertilizer production, is made through a catalytic reaction of hydrogen and nitrogen. Unigel aims to procure the latter from third parties who produce it with wind-powered air-separation units; by combining it with green hydrogen rather than the conventional kind, it will ensure its ammonia is “green,” or carbon neutral.

The plant in its initial stage will comprise three, 20-megawatt electrolyzers capable of producing 10,000 metric tons of green hydrogen a year—sufficient to support output of 60,000 tons of green ammonia annually. The electrolyzers will be supplied by thyssenkrupp nucera, a provider of hydrogen technology controlled by Thyssenkrupp, the German steel and industrial-engineering firm. Project organizers forecast that the plant’s electrolyzer capacity will be expanded so that by the end of 2025, the Camacari facility will be able to produce 40,000 tons of green hydrogen and 240,000 tons of green ammonia annually.

Unigel produces fertilizer and to a lesser extent acrylics—whose manufacture also involves hydrogen—so the company will be able to integrate green ammonia into its operations, Unigel officials say. They add that eventually, the company could also sell green hydrogen for additional purposes ranging from steel manufacturing and synthetic-fuel production to powering fuel-cell vehicles.

“Producing green hydrogen and green ammonia are important steps in helping to decarbonize industrial sectors,” says Luis Felipe Fustaino, Unigel’s executive director. “These zero-carbon products will help the country meet its Paris Agreement commitment to reach its goal of net-zero carbon emissions by 2050.”

EDP Brasil, a local subsidiary of Energias de Portugal and a major Brazilian utility company, inaugurated a solar-powered green-hydrogen pilot plant on Jan. 19. The R$42 million (US$8.2 million) facility is located in Pecém Port, one of the two biggest ports in the northeastern coastal state of Ceará.

The green hydrogen is being used to help fuel a 720-megawatt thermoelectric generating station EDP operates at the port, thus reducing its use of coal as a feedstock, says Constantino Frate, a project consultant for Pecém Port. If the project is successful, Frate adds, the company will build an industrial-scale green hydrogen plant to decarbonize the power station completely by 2034.

Twenty-four other companies—among them the Qair Group, a French renewable energy producer; White-Martins, a U.S.-German industrial gas producer, and the AES Corp., a U.S. energy producer—are conducting feasibility studies to install industrial scale green-hydrogen plants at Pecém, with the power to come from a mix of solar and wind plants in Ceará state, Frate says.

Ceará state is emerging as a potential hub of green-hydrogen projects. That is largely because it has year-round sunshine, the country’s best coastal wind conditions, and in Pecém Port possesses the closest Brazilian shipping center to continental Europe.

In southeastern Rio de Janeiro state, the Brazilian subsidiary of the oil and gas company Shell is planning a green-hydrogen pilot plant in collaboration with the port of Açu. The deepwater port is run by a local logistics company controlled by Washington, D.C.-based EIG Global Energy Partners, an international energy-investment group. The pilot facility is slated to go online in 2025—the first step, project partners say, toward construction of an industrial-scale green-hydrogen plant at the port.

Like Chile, Brazil expects to become a global player in green hydrogen production when the cost of making the fuel becomes more competitive with that of conventionally produced hydrogen.

“In at least six Brazilian states, [green hydrogen] projects are underway or letters of intent have been signed,” says Amanda Ohara, coordinator of energy initiatives at the Climate and Society Institute (ICS), a nonprofit that finances Brazilian climate-change mitigation projects.

Brazil could become one of the world leaders in the production of green hydrogen, according to a study done by McKinsey & Company. The study cites Brazil’s abundant wind and solar energy potential, especially in northeastern states, its integrated, low-carbon power grid and its geographic advantages in exporting to Europe and the east coast of North America, as well as supplying the domestic market.

McKinsey estimates green-hydrogen production in Brazil could generate US$15-20 billion in revenues by 2040 with most of that amount—some US$10-12 billion—coming from sales to energy-intensive domestic sectors such as trucking and steelmaking. An estimated US$4 to 6 billion could come from exports of green-hydrogen derivatives to the United States and Europe, McKinsey says.

The BloombergNEF commodities-research firm estimated in January 2022 that in 16 of the 28 countries it modeled, green hydrogen by 2030 could become cheaper than both conventionally produced hydrogen and “blue” hydrogen, which is made from natural gas but involves carbon capture. Brazil could be the cheapest source in those 16 countries, the study said, followed by Chile and Peru as the second and fourth cheapest. The decline in green-hydrogen costs, the study forecast, “will unleash a tectonic shift in the hydrogen market.”