Mexico's green hydrogen pipeline grows as senate moves to set common rules

Mexico's senate has made the first move towards establishing a set of common rules for the budding green hydrogen market in the country.

The legislative body's energy committee started a series of meetings on Tuesday aimed at developing a regulatory framework, through collaboration with hydrogen trade group AMH2.

The initiative is being led by PAN senator Xóchitl Gálvez, a notorious defender of the 2014 energy reforms and critic of the current government's energy policies.

"We should at least lay the groundwork for what we have to do in this area of hydrogen," the senator said. "My proposal is that we ... work with the energy committee to do a simple task, set out what is needed in the law and then [work] with the economy ministry to advance the regulation as fast as possible," she said in a forum on green hydrogen.

Mexico has fallen behind regional peers like Chile and Brazil in terms of regulation and support for the green hydrogen industry, with other countries in the region having drafted national plans and other policy instruments. In Mexico, development has been led by State power utility CFE and national oil company Pemex, who have pledged to develop green hydrogen pilot projects.

In fact, the government envisions a green hydrogen industry spearheaded by a new CFE subsidiary specialized in the area, Israel Hurtado, AMH2's president, was quoted as saying by daily Reforma.

So far, CFE's development strategy has focused on Baja California and Sonora states, where the firm already has renewables capacity installed. The utility has said it will move into the green hydrogen space through projects tied to the US$1bn Puerto Peñasco solar park in Sonora, currently under construction, and the Cerro Prieto solar plant near Mexicali, Baja California, which started operations in 2012.

Meanwhile, Pemex has included green hydrogen use in its refineries in latest five-year business plan, although more specific details are yet to emerge.

"What's important is that this doesn't lead us to limit private sector participation in the matter," Hurtado said, "because there are companies that already produce grey hydrogen, private production that supplies an industry, and if the creation of a [public] subsidiary is deemed viable, we welcome the competition."

The main bone of contention regarding private green hydrogen development is that it would involve the construction of large private wind and solar generators, which the administration of President Andrés Manuel López Obrador has made difficult. These plants could even be located outside Mexico's national transmission grid to ensure optimal location, something the administration has directly opposed in the past.

But there are several private sector projects in early stages of development in Mexico. The largest to be announced publicly is in Durango state, where Dutch fertilizer firm Tarafert intends to build a large green ammonia, urea and hydrogen production plant. 

The project is made up of two facilities, Tarafert-1 and -2, which will produce 500,000t/y of green ammonia and 1Mt/y of green urea through a 1GW solar park, with first production expected in 2026.

Publicly available details on other projects are still lacking. Spanish firm H2V2 has said it is developing a hydrogen plant for a large industrial firm at an unspecified location, and Sener México told Forbes last year it was looking to build small-scale green hydrogen production plants with capacity below 2.5MW.

Trade group H2 Mexico has also said another Spanish firm is developing a pilot project in Guanajuato state, which would involve blending hydrogen with natural gas to reduce carbon emissions.