The big green hydrogen trend in Latin America

Latin American green hydrogen projects are chiefly targeting export markets and derivative product green ammonia is blinking brightest on investor radars.

That was among takeaways from a webinar hosted by the World Energy Council to coincide with the publication of a working paper titled Regional Insights into Low-Carbon Hydrogen Scale-Up.

Former Chilean energy ministry official Max Correa, today Latin America director at fund manager Copenhagen Infrastructure Partners (CIP), said interest in spurring local demand or applications was limited in Latin America.

“Rather, what is growing very rapidly is large-scale – or at least the announcements of large-scale – projects in the region. I have seen movement not only in Chile but also in Argentina, Brazil, Colombia, Uruguay and even in countries like Bolivia – I’ve heard of projects there,” Correa said. “Lots of movement in Latin America. Basically, all aimed at large-scale projects for export to demand centers: Asia, Europe, the US eventually.”

Chile, Brazil and Uruguay are positioned to become Latin America’s first exporters, followed by Colombia in the medium term and Peru in the long term, according to the working paper. 

Derivative product green ammonia, which is easier than hydrogen to transport and can be used in the fertilizer, shipping fuel and power generation sectors, among others, is the “preferred carrier.” Global ammonia production is around 200Mt/y. Projects which have already been committed add up to around 10Mt of green ammonia by 2030, with the full pipeline of projects reaching 50Mt, Dolf Gielen, director of international renewable energy agency IRENA’s innovation and technology center, told BNamericas recently.

Meanwhile, companies have already started committing financial resources to projects in the region and, the webcast was told, the major challenge globally to get the wheels spinning faster is sending the right demand-side signals to the market via the likes of regulatory frameworks and targets. 

In trailblazer Chile, export-focused projects include the US$3bn HNH green ammonia scheme, planned for Magallanes region. Chile – working on a law to treat hydrogen as a fuel, to send a strong signal to the market – also has green hydrogen projects aimed at the mining sector and construction has started on a pilot synthetic fuel plant. 

In regional economic powerhouse Brazil, several states – chiefly in the northeast – are working to become green hydrogen hubs. Players looking to export from Brazil include Australian company Fortescue Future Industries (FFI), which also has neighboring Argentina in its crosshairs.

Among Latin America’s biggest projects is the US$8.4bn Pampas green hydrogen facility planned for Río Negro province in Argentina by FFI. While the project is still in the early planning phases, the target is to start exports from 2027, according to the provincial government. Provincial lawmakers have passed associated bills in preparation.

“There are many players willing, from the very beginning, to create projects for export, securing land with great renewable resources, near a port and access to water for the electrolysis,” Correa said. “And because of the resource being so good and the capacity factor being so high, they are thinking of – like my company CIP – aiming to produce green ammonia at a very competitive price. We are already speaking with traders, possible offtakers to create 100% off-the-grid hydrogen projects.”

Both Argentina and Brazil have large demand for crop fertilizers, which could help spur local demand. 

The region is blinking brightly on the radar of green hydrogen developers chiefly on the account of its wealth of renewable energy resources and available land. Producers will need masses of cheap electricity to help turn a profit. 

Hurdles along Latin America’s green hydrogen highway include infrastructure gaps and a lack of skilled personnel, Correa said, adding that the environmental impact of large-scale hydrogen projects needed addressing carefully. 

SUPPY CHAIN RESILIENCE

Europe, on account of production limitations, is seen as a major future offtaker of green hydrogen from Latin America and other regions.

Hydrogen could account for 10-15% of the energy mix in Europe by 2050, said Béatrice Buffon, senior executive VP at French energy firm EDF’s international division and vice chair for Europe at the World Energy Council. Around 30Mt of hydrogen, or about half, would need importing a year. Associated requisite investment would be US$1tn, with half for production and half for logistics infrastructure. "It means huge investment," Buffon said.

Buffon said more focus needed placing on the resilience of global hydrogen and hydrogen technology supply chains, “so that we are not dependent on one [geographic area] specifically, to avoid any dependency as we see today with the gas coming from Russia, obviously.”

The climate crisis, coupled with the energy fallout from the Russian invasion of Ukraine, has prompted Western governments to sharpen their focus on the potential of green hydrogen and its derivates as substitutes for fossil fuels.

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