Latin America, Chile at the forefront, is keen on developing green hydrogen industry

RIO DE JANEIRO, BRAZIL – For Latin American and Caribbean countries, to which the pandemic added another “lost decade” in terms of economic growth after the 1980s debt crisis, “nurturing a sustainable energy future” is one of the priorities to restore growth, the report notes.

Efforts to reduce CO2 emissions will be the focus of the upcoming UN COP26 climate change summit to be held in November in Glasgow, Scotland.

Hydrogen is an alternative to fossil fuels contributing to climate change because it does not emit pollutants when burned. But current hydrogen generation, mainly from natural gas and coal, is under scrutiny for emitting large amounts of CO2.

Consequently, the world is focusing its efforts on green hydrogen, that is, hydrogen generated by electrolysis from renewable energies, such as solar, hydro and wind power.

The export of this clean fuel from Latin America is “a pathway to inclusive, resilient and green economic recovery,” says the World Bank report, presented at recent meetings of the World Bank and the International Monetary Fund.

“Latin American countries have great potential to successfully participate in the global green hydrogen market due to their wealth of natural resources to produce renewable energy,” explained World Bank senior energy specialist Janina Franco.

“This potential could be a great opportunity for Latin America to become a leading region for green hydrogen production, which would allow it not only to deepen its own energy transition, but also to supply the green hydrogen market in Europe or Asia,” she added.

CHILE AT THE FOREFRONT

Argentina, Brazil, Chile, Colombia, Mexico and Trinidad and Tobago have the “potential” to become global exporters of green hydrogen, says the World Bank report, which cites data from the International Energy Agency (IEA).

According to the IEA, founded by the Organization for Economic Cooperation and Development (OECD) after the 1973 oil crisis, these countries can offer competitive prices to importers in Europe and Asia.

Since September, 13 Latin American and Caribbean countries have been showing interest in developing a domestic green hydrogen industry: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Mexico, Paraguay, Peru and Uruguay, according to the H2LAC platform.

Franco pointed out different stages in the green hydrogen industry in the region.

Countries such as Paraguay, Costa Rica, Colombia and Uruguay, whose electricity generation is almost entirely renewable, show “substantial progress” in their hydrogen strategy and regulations, she said.

Others, such as Brazil, Argentina, Mexico and Peru, which have great local demand potential from mining and the production of steel, iron or chemicals, are in a “nascent process” in terms of roadmap and regulations.

Chile is at the forefront, the first country in the region to launch its “National Green Hydrogen Strategy” in November 2020, and with domestic and foreign stakeholders interested in using this clean fuel and its derivatives, such as ammonia, methanol or synthetic fuels.

Aiming to lead the world’s green hydrogen production within three decades, Chile announced last week that by 2030 it expects the Santiago airport to be the first in Latin America to operate with green hydrogen and its derivatives.

FEWER EMISSIONS, MORE JOBS

The World Bank highlights green hydrogen as a solution to “decarbonize” sectors that are difficult to electrify, such as long-haul shipping and aviation, and heavy industries.

It also stresses that this clean fuel can help countries develop green energy value chains, enabling them to be globally competitive in the production of steel, copper, ammonia or fertilizers.

“Green hydrogen and its derivatives can represent a source of export revenues by strengthening the region’s access to developed markets willing to pay a premium to secure green value chains,” the report states.

The green hydrogen industry has another advantage: creating “green, local and resilient” jobs, both direct and indirect, particularly in the areas of production, transportation and distribution, the World Bank notes.

But the transition to green hydrogen is not free of challenges, including cost-competitive production, the development of adequate infrastructure, and the availability of experienced professionals with the knowledge to operate the new technology, Franco noted.

“The biggest challenge for countries in the region and the world is to achieve competitiveness in production costs and reach prices that will allow replacing the use of hydrocarbons with green hydrogen,” she said.