CAP, Chile’s leading steelmaker, plans to use green hydrogen in place of coal through the development of a green hydrogen pilot plant. The plant is planned to be constructed at its facility in the south-central Talcahuano city.

The project is supported by one of the Chile’s clean energy initiatives, the Green Hydrogen Accelerator (H2V) initiative, which aims to help develop the country’s hydrogen industry.

The pilot phase of the project will run through 2025, with the plant expected to generate 1.5kt/yr of green hydrogen, and produce 25kt/yr of sponge iron or hot iron briquettes.

According to Patricia López, the head of CAP infrastructure, the steelmaker will evaluate the present business model through 2029 as well as evaluate how much its current and future clients are willing to pay for steel produced using green methods.

Chile’s goal is to generate the cheapest green hydrogen in the world by 2030. Additionally, by 2040, the country wants to become one of its top three exporters.

According to a 2020 study from global management consulting firm, McKinsey & Company, Chile is in a unique location due to renewable resources in the Patagonia and Atacama, which makes it the lowest cost place in the world to generate green hydrogen. The study estimated that the South American country could produce a kilogram of hydrogen for $0.80 to $1.10, by 2050.

As stated by CAP, its green hydrogen pilot plant, along with the nation’s other existing and upcoming hydrogen projects, will work toward helping Chile to reach its ambitious hydrogen goals.