The UK and Chile have rubber-stamped an agreement aimed at financing green hydrogen projects in the South American country, in a deal that could open up further export opportunities for businesses with expertise in the sector.
The partnership agreement between the UK and Chile is backed by more than £5bn in UK export credit support. It was signed by the CEO of UK Export Finance (UKEF) and the executive vice president of Chile's economic development agency at a ceremony in London on 9 September.
"The two government agencies are seeking to pool resources and jointly finance eligible hydrogen projects in Chile," says the UK government. "This is expected to increase liquidity in Chile's burgeoning renewables sector and create millions of pounds in new export opportunities for world-leading cleantech businesses from the UK."
The term "green hydrogen" is used to describe hydrogen produced using renewable energy sources like solar and wind. The UK says low-carbon hydrogen "can act as a flexible generating technology and provide long-duration energy storage by making use of curtailed electricity."
Despite the optimism about its potential, scaling up green hydrogen installations is a major challenge – cost remains a big hurdle – and today, the bulk of hydrogen production is reliant on fossil fuels such as natural gas and coal.
Chile is looking to develop its green hydrogen industry over the coming years. In May it presented details of its Green Hydrogen Action Plan, with the country's president, Gabriel Boric, describing the sector as "taking off."
"There are more than 50 projects in Chile in different phases of development, especially in Antofagasta and Magallanes," Boric said.
The UK government says that Chile has pledged US$50mn to the development of green hydrogen generation and Tim Reid, CEO of UK Export Finance, is confident that the newly announced partnership between the two countries will create opportunities for UK businesses.
"UK businesses are world-renowned as leaders in the clean energy sector," he says. "This is a win-win agreement which paves the way for major UK export contracts and will support Chile's ambitious plan for transitioning to renewable energy."
UK exports to Chile rose by 9.4% to reach £1.2bn in the four quarters ending Q1 2024. This announcement further strengthens the ties between the UK and Chile's hydrogen sectors, and comes following a December 2023 trade mission of British renewable energy and hydrogen firms to Chile.