Who's winning Latin America's green hydrogen race?

Latin American countries are vying for position in the future international green hydrogen market, which is expected to take off starting in 2025.

The countries that are currently best positioned are Chile, Brazil and Uruguay, followed by Colombia, according to several experts and industry participants.

"At the level of small projects, Europe is going to go ahead and have local generation of hydrogen for specific consumption," Nora Castañeda, Sener Energy's hydrogen business manager, tells BNamericas. 

"But from then on, to obtain large volumes of hydrogen at reasonable prices, development in Europe will be quite in step with development in Latin America or other areas, such as the Middle East."

Local developers are already moving forward with pilot projects to test the technology and its interlocking supply chains. The BNamericas database tracks 30 projects with an investment of at least US$50mn in the region. Chile and Brazil each have 11 of those projects, while Argentina, Paraguay and Mexico have two each, and Uruguay and Colombia, one each. 

Only one of the projects is in the construction phase – HIF's Haru Oni, a US$50 pilot in southernmost Chile that is expected to come online before the end of the year and will produce 3.9t/d of crude methanol by combining captured carbon dioxide and green hydrogen. If the pilot is successful, the project would be scaled up in partnership with Enel Green Power, targeting a 2026 startup.

Meanwhile, Engie's US$47mn HyEx pilot in northern Chile had its environmental impact statement approved by assessment agency SEA and now awaits a final construction decision. The remaining projects are in different stages of early works, including early design and feasibility.

With the region still far away from large-scale green hydrogen production, advances in regulation, planning and incentives programs are playing the key role of attracting developers' attentions and providing a long-term outlook. 

"Countries need to focus on being clear with investors about the size and scope of the opportunity," says Gabriel Salinas, counsel of the private equity and project development practices at law firm Shearman & Sterling. 

"You need to think about resources, geography, and government support. Chile has been at the forefront due to those three resources. You can also see Brazil making great strides. Mexico has great resources, but the government needs to be more supportive."

Chile developed a green hydrogen roadmap and set goals such as having 5GW of electrolyzer capacity under development by 2030 and achieving a price of US$1.50 per kilogram by 2030. Incentives include a US$50mn financing round for private pilot projects through development agency Corfo. 

The hope is that, though a clear roadmap, regulatory certainty and some economic incentives, the country's resources will attract the interest of international and local developers.

Following a similar model, Uruguay has pledged to have 20GW installed by 2040. Through its H2U program, the country is working on long-term planning that includes regulation and incentive schemes. It's also conducting a US$10mn research and development funding round and long-term bidding rounds to explore offshore wind and green hydrogen potential.

In Brazil, where local demand for hydrogen is strong in the fertilizer, refining and petrochemical industries, support is coming from its large ports: Suape, Pécem and Açu, which are looking to decarbonize operations. The country approved its national hydrogen roadmap in August and there is strong industry interest.

Argentina is developing its 2030 hydrogen roadmap, which has yet to be published. Though the country faces deep macroeconomic headwinds, it's still attracting the interest of some developers like MMEX-Siemens and Fortescue due to the quality of its renewable resources.

In Central America, Panama is drafting plans to become a green hydrogen marketplace, storage and transport hub through its H2UB roadmap. While the country lacks the comparative advantages to become a large-scale producer, it plans for 82Mtpa of hydrogen and derivatives to pass through the Panama Canal by 2030, and 190Mtpa by 2050.

In neighboring Costa Rica, congress is debating a bill to implement a "hydrogen economy" in order to spur decarbonization, including the production of equipment and parts. The country is also drafting a national green hydrogen strategy.

Other countries in the region that have made significant strides to develop a green hydrogen industry include Trinidad and Tobago, Barbados, Guatemala, Honduras, Paraguay, Colombia and El Salvador.