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Green hydrogen (GH2) ambitions vary significantly across Latin America, despite the region’s favourable conditions for production. This article investigates the contrasting trajectories of GH2 sector development in Chile and Peru – two countries with similar natural endowments but divergent levels of engagement. Drawing on a political economy perspective, the article develops a theoretical typology based on the interaction between state capacity and business positioning. It identifies four ideal-type configurations of state-business relations: cooperative, contentious, business-driven/project-based, and non-alignment/non-development. This typology offers a heuristic tool for analysing different pathways of engagement with GH2. Using a comparative case study design grounded in documentary analysis and 17 expert interviews, the article shows that Chile follows a cooperative model, where a high-capacity state and a supportive business sector jointly advance GH2 development through strategic coordination, public investment, and international partnerships. In contrast, Peru exemplifies a business-driven, fragmented approach, shaped by low state capacity, institutional volatility, and the influence of a powerful fossil fuel sector. The findings highlight the importance of state-business configurations in shaping green industrial policy in the Global South and point to future research avenues including the role of fossil sector resistance, external actors, and civil society mobilization.

Explaining Varying Green Hydrogen Ambitions: State Capacity and Business Positioning in Chile and Peru