As oil majors around the world solidify their positions in the hydrogen industry, the IEA has highlighted Latin America as a clear area of opportunity for the production of what many expect to be the energy source of the future. “Latin America could become a key contributor to the global push towards low carbon hydrogen”, the IEA stated in a 2020 report.
Hydrogen fuel is forming part of the long-term global energy transition as Big Oil strives to decarbonize its energy production over the next decades. Hydrogen provides a carbon-free base for synthetic fuels to power transportation and manufacturing, making it an ideal energy source.
At present, hydrogen production across Latin America is limited in scope, however, pilot programs are steadily being developed to trial hydrogen use as an energy carrier.
Argentina, Brazil, Chile, and Colombia have all released strategies to develop their hydrogen industries, all expecting to become low-carbon hydrogen exporters in the coming years. Mexico, Paraguay, and Uruguay are also looking to use hydrogen energy to decarbonize industry and transportation, but have yet to establish political strategies to develop the sector.
As around 120 countries around the world have announced plans to achieve net-zero within the next few decades, Latin America could position itself to be a hydrogen market leader, with Chile taking the regional lead, if it invests in the industry now.
Chile was in the first dozen countries globally to push forward a national hydrogen strategy in 2020, with the country planning to use hydrogen energy to become carbon-neutral by 2050. H2 Chile, the Chilean Association of Hydrogen, is a public-private organization focused on the research, development, and use of hydrogen for industry, commerce, and transportation.
According to a 2020 study, Chile could produce 25 million tonnes per year of green hydrogen, earning around $30 billion annually in liquified exports. In addition, the country could capture as much as 50 percent of the Japanese and South Korean markets and 20 percent of the Chinese market.
Chile’s anticipated production for 2030 could represent around 5 percent of the global green hydrogen market if the government strategy is achieved. While transportation costs are expected to be high, due to its geographical situation, this would balance out thanks to low production costs. In 2020, there were around 20 pilot projects already in operation across the country, highlighting the optimism around investment in hydrogen in Chile.
Not far behind, in Argentina, the H2Ar Consortium has been launched for the development of the country’s hydrogen economy. H2Ar is a space for oil and gas companies, renewable energy producers, and transportation companies to explore and develop Argentina’s hydrogen potential. State-owned Integración Energética Argentina (Ieasa) is also expected to participate in the country’s hydrogen production.
Just recently, Mexico has also appeared on the regional hydrogen stage. While there is no clear state-level policy for the development of hydrogen, at the local level there is a significant push to get involved in the industry.
The Mexican hydrogen group Asociación Mexicana de Hidrógeno (AMH) was formed in February, bringing together over 30 energy companies across various Mexican states to develop a national hydrogen plan in collaboration with authorities. Earlier this year, the Mexican Energy Ministry also mentioned hydrogen as a potential replacement for fossil fuels in the future, in the national development plan.
Oil supermajors around the world, including Total, Equinor, ExxonMobil, BP, Shell, and Chevron have all announced the development of hydrogen plans as the industry seeks to decarbonize its practices. As hydrogen grows more popular, it seems inevitable that Latin America will establish its role in the industry within the next few years to ensure its stake in global energy.
By Felicity Bradstock for Oilprice.com
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Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More
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