Green hydrogen and linkage-based development in Antofagasta, Chile

Abstract

The green hydrogen industry will grow tremendously in the coming decades. Peripheral regions in the Global South that offer favourable natural conditions for renewable energies are expected to become nodes of emerging global value chains. This has led to high expectations with regard to development impulses. The paper assesses the prospects of linkage-based development in the region of Antofagasta, Chile. Against the backdrop of expert interviews, secondary sources and insights gained at the first meeting of the region’s green hydrogen committee, the author cautions against being overly optimistic. The green hydrogen industry in Antofagasta benefits from horizontal linkages with the mining sector and related externalities. There are prospects for forward linkages with mining and also chemicals production. Backward linkages will, most likely, be limited to generic, low value-adding tasks. This restricts industrial diversification and upgrading by suppliers. Being capital intensive, the green hydrogen industry will not create many jobs. Through taxation, the region and especially small municipalities may gain access to additional revenues though.