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Green hydrogen takes its first steps in Latin America

This clean fuel is obtained from the electrolysis of water, a process that uses electricity to separate hydrogen from oxygen. In Colombia, the Minister of Mines and Energy, Diego Mesa, said in November that the government is also working on a roadmap to encourage it.

Hydrogen is the most abundant element in the universe. It is used as an input in the refining of petroleum, the production of ammonia and methanol, and the manufacture of steel, with a demand of 70 million tons per year. But it is almost entirely generated from fossil fuels, releasing polluting emissions. (You may be interested: Hydrogen reaches the US and endangers the reign of gas)

However, there is an alternative. Green or renewable hydrogen is the great bet of many countries to take advantage of the potential of renewable energies, and at the same time generate a clean fuel, which allows to replace the millions of cars and trucks that today run on gasoline and diesel.

Green hydrogen is made from the electrolysis of water, a process that uses electricity to separate hydrogen from oxygen in water. That is why if the energy used is obtained from renewable sources, polluting emissions will not be generated, which aggravate climate change.

It is estimated that, by 2030, Europe, the United States, China, Japan and Korea will have 2.7 million hydrogen-electric private cars, which will require a consumption of 710,000 tons of hydrogen per year. 40% of that demand would be produced by these countries, while the remaining 60% would have to import.

This is where Latin America comes in. The region has the cleanest electricity production in the world, and enormous potential to maintain this position thanks to its enormous solar and wind potential. That is why many countries from Chile to Costa Rica are already taking the first steps to produce and export green hydrogen in the near future.

This would allow the region not only to accelerate its own energy transition, but also to generate foreign exchange for the economy, severely affected by the COVID-19 pandemic. In addition, high electricity generation peaks from renewable sources could be harnessed by using the surplus to produce hydrogen.

“Latin America has some of the most abundant and competitive renewable energy resources in the world, including hydroelectric, solar and wind. The elements that make the region a world leader in renewable energy can facilitate a similar rise in clean hydrogen production in this decade, ”says Cecilia Aguillon, director of the Energy Transition Initiative at the Institute of the Americas.

The Chile project

Chile has a national strategy for green hydrogen that aims to turn the country into a world-class producer and exporter in less than 20 years. The government will provide financing, update regulations, stimulate investment and development, and encourage public and private actors to integrate green hydrogen.

President Sebastián Piñera’s plan has three main objectives: to produce the cheapest green hydrogen on the planet by 2030, to be among the top three exporters by 2040, and to have 5GW of electrolysis capacity under development by 2025. The first step will be a round of financing of US $ 50 million.

“Green hydrogen can represent an industry as important for Chile as copper is today,” says Juan Carlos Jobet, the country’s Minister of Energy. “We have tremendous competitive advantages to be world leaders in the production and export of green hydrogen thanks to our renewable energies.”

According to the strategy, Chile could produce up to 160 megatons per year of green hydrogen. In its growth plans, the Government predicts that the local industry would start with a US $ 1 billion market for local applications in 2025 and grow 15% a year to US $ 9 billion in 2050, plus US $ 24 billion in exports.

The development of the technology would come in three stages. First, focused on domestic consumption through existing demand, for example, from refineries. Then, the use of hydrogen in the transport sector would be promoted at the local level. Finally, the large-scale deployment of export infrastructure would come.

Chile went from having a 3% installed capacity of unconventional renewable energy in 2014 to currently having 25%, taking advantage of solar radiation in the north of the country and the strong winds of Patagonia. This means that it has already met its goal of having 20% ​​renewable energy by 2025.

Last year, it announced its commitment to being carbon neutral by 2050 and promised to phase out all coal-fired power plants by 2040. To do so, it hopes to further expand solar and wind power, in line with the strategy of producing green hydrogen. .

“We have 70 times more renewable energy generation capacity than we currently consume, so we have to find ways to take advantage of that potential, not only to improve our quality of life, but also to export it to the world and to generate income”, Jobet warns.

The role of Argentina and Uruguay

Uruguay also plans to encourage the development of green hydrogen production in the coming years with the aim of exporting it. The country is a leader in renewable energy in Latin America, with a matrix based 98% on clean sources thanks to decades of government policies in that direction.

For the development of the industry, the government of Luis Lacalle Pou plans to encourage the arrival of foreign private companies that invest in production in exchange for signing supply contracts with the State. The first step will be to build a pilot plant in Montevideo, the country’s capital, with the capacity to produce 900 kilos of hydrogen per day.

The Verne project, as it is known internally, will require an estimated investment of US $ 20 million during the year that the works will take. For this, the national oil company Ancap will call a tender to award a construction, operation and maintenance contract.

“We see with good prospects the possibility of exporting hydrogen to companies that need to decarbonize their matrix. Uruguay can have hydrogen generated from this certified green electricity and that has value for central countries that are seeking to decarbonize, ”says Omar Paganin, the national energy minister.

Despite only having 8% renewable energy, Argentina also has outstanding solar and wind energy potential that would allow it to project the production of green hydrogen. However, public policies have not yet been developed to promote its development.

The country has a Hydrogen Promotion Law, enacted in 2006 but not yet regulated. The norm establishes the creation of the National Fund for the Promotion of Hydrogen (Fonhidro), which would be financed by the State, and hydrogen projects would have numerous tax benefits.

However, the law runs the risk of expiring at the end of 2021 if it is not regulated. That is why the deputy for the Radical Civic Union Gustavo Menna presented, in 2019, a bill to postpone its expiration date for 20 years and update the text, focusing on the production of green hydrogen.

“The Executive Power has not started it or gave it a budget. There is a ruling class that does not have a strategic perspective and that wastes time with minor issues. As a country, we have lost our medium and long-term vision, ”explains Menna, who is awaiting treatment in commission of the project. (Read here also: How to reduce 51% of CO2 emissions?)

According to the deputy, the current green electricity generation capacity that Argentina has is sufficient to be able to promote the local hydrogen industry in a first stage, focused on public transport. But, he warns that it would be necessary to improve the infrastructure for its distribution throughout the country.

Local companies have taken the first steps to mobilize the industry. Y-TEC, YPF’s technological research company, launched the H2AR consortium together with the National Council for Scientific and Technical Research of Argentina (Conicet). The same will work in the next two years in the study of scenarios for the production, transport and export of hydrogen.

“The initial objective will be to consolidate a common vision and outline roadmaps in different fields of application, which allow identifying challenges, promoting joint pilot initiatives and creating a regulatory and business environment”, explains the General Manager of Y-TEC, Santiago Sacerdote .

Pilot plans in Latin America

Paraguay has also joined the hydrogen stakeholder group by promising a roadmap with the help of the Inter-American Development Bank (IDB). The strategy will determine the use of fuel for long-distance cargo and passenger transport, planning a first hydrogen pilot plant.

In Colombia, the Minister of Mines and Energy, Diego Mesa, said in November that the government is also working on a roadmap to encourage green hydrogen. From there, progress will be made in a regulatory framework to encourage research on the subject and private investment, he explained. (We suggest: In a renewable event, Colombia will show business opportunities in hydrogen)

“Green hydrogen plays a dominant perspective globally. It promotes energy security, sustainability and equity, while at the same time being part of the four axes of the energy transition: decarbonization, decentralization, digitization and demand ”, says José Antonio Vargas, director of the energy company ENEL in Colombia.

Costa Rica took its first steps in 2011, when the company Ad Astra Rocket and the state-owned Refinadora Costarricense de Petróleo created an experimental hydrogen center. The country presented its long-term decarbonization strategy in 2019, in which it proposes to develop green hydrogen to be carbon neutral by 2050.

The Costa Rican Hydrogen Alliance, a group of mostly private companies that represent all the actors present in the green hydrogen value chain (renewable energy, hydrogen infrastructure, gas distributors, vehicle companies, etc.), lead the impetus for its development.

“Latin America benefits from extensive resources of renewable energy and water, both key ingredients in the production of green hydrogen. If we can take advantage of this potential, it could lead the region towards energy independence, ”concludes José Antonio Castro Nieto, chief scientist at Ad Astra Rocket in Costa Rica.

* This publication is part of a journalistic project led by Periodistas por el Planeta (PxP) in Latin America. Creative Commons License, with mention of the author / s and the source (PxP).

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