Chile tables tax breaks for green hydrogen and e-fuels
Chile’s finance and energy ministries have submitted a bill to the Chamber of Deputies that could introduce tax credits for buyers of domestically produced green hydrogen and its derivatives.
IMAGE: Drone view on Harbour of Valparaiso, Chile. Getty Images
The proposed bill seeks to approve tax credits of up to $2.8 billion via six auctions over five years to 2030, covering purchases of green hydrogen and its derivatives such as e-ammonia, e-methanol or e-methane from local producers.
“The design contemplates that in the first years a greater volume [of credits will be available] and that, progressively, a decreasing ceiling be established on the amount of the benefit to request,” the finance ministry said.
The benefit would apply “exclusively to the first purchase”, with credits calculated based on each kilogram of green hydrogen acquired. The exact value of the credit ($/kg) has yet to be defined.
The bill also outlines a special tax regime for green hydrogen producers in the Magallanes and Chilean Antarctica regions.
It aims to make Chile "a benchmark in the production and export of this fuel," the ministry said.
The draft must now pass both houses of Congress and be endorsed by the President before becoming a law.
“We want to consolidate Chile as a world leader in the production and use of this clean fuel," the Minister of Finance, Mario Marcel said.
Japanese shipping company NYK Bulk & Projects Carriers announced last year plans to fuel 10–15 ammonia-capable bulk carriers on order with green ammonia sourced from Chile, including volumes from Enaex’s planned 18,000 mt/year plant in Mejillones.
A tax credit for purchasing green hydrogen and its derivatives could reduce the premium that green fuels currently carry, helping bunker buyers who are highly sensitive to price gaps with conventional fuels like VLSFO or MGO.
By Konica Bhatt
Please get in touch with comments or additional info to news@engine.online
