Latin America makes moves on ‘fuel of the future’

Chile, for example, has almost 30 initiatives ranging from the application of hydrogen in public and cargo transport, to the production of methanol or “green” ammonia for the explosives industry.

Among the most notable projects under development are: the H2 Magallanes in Southern Chile, promoted by Paris-based Total Eren, which will include a port facility for export; the Haru Oni pilot project backed by Chilean firm HIF, the Italian Enel Green Power and German multinational Siemens Energy, which will focus on renewables-based fuel production in the Magallanes region; and the HyEx project led by the French energy company Engie and the Chilean Enaex, in Antofagasta province.

Colombia has more than ten projects under study, and the areas of application range from the construction of a green hydrogen hub to supply the steel industry, to the production of fuel from renewable energy surpluses, for mobility and industrial use. For example, a green hydrogen initiative is already in operation at Ecopetrol’s Cartagena oil refinery, powered by solar panels. Natural gas supplier Promigas also has an active project in the country.

Uruguay, meanwhile, is working on the H2U pilot, an official strategy that can be applied both in heavy transport and in the production of ammonia and green fertilisers. In the private sector, the German company Enertrag, in cooperation with the Uruguayan SEG Ingeniería, is promoting the Tambor Green Hydrogen Hub, a plant for the production of green hydrogen and derivatives such as methanol, in the department of Tacuarembó.

In Argentina, a clean hydrogen production plant already exists in Comodoro Rivadavia, in the Patagonian province of Chubut, run by the domestic company Hychico. Authorities have also announced the landing of the Pampas project in the province of Río Negro, a multi-million dollar initiative focused on green hydrogen production on an industrial scale led by Australian firm Fortescue Future Industries.

Projections for green hydrogen

Amid the excitement of entering a potential billion-dollar market and difficulties in launching new technologies, the race to be the regional leader in green hydrogen has already begun, and Latin America is preparing its next moves for the future.

Some questions have been raised over the sustainability of green hydrogen, particularly regarding the water consumption required for its production, in a region that has regularly seen periods of intense drought, from Chile to Argentina and Brazil. To obtain one tonne of green hydrogen can require as much as 9 tonnes of water, which could present a stumbling block in some of the region’s drier climes. But in Uruguay, for example, such volumes are not considered to be problematic when compared to water usage in other productive sectors.

For Monica Gasca, the executive director of Hidrógeno Colombia, the Colombian hydrogen association, the biggest challenge for the industry will be to encourage local demand for green hydrogen, as well as to establish new financial instruments to leverage projects. Gasca also expressed caution over the development of green hydrogen, saying that the fuel “is not the solution for everything”.

“It is not a Swiss army knife or a silver bullet,” Gasca said. “Hydrogen has certain niches that need to be exploited, but first we have to solve energy efficiency and electrification issues.”

Other challenges will be the creation of public policies that encourage technological advances, and ensuring that initiatives are implemented in a way that does not bring conflict with or disturbances to urban and indigenous communities, the experts consulted agreed.

Green hydrogen is not a Swiss army knife or a silver bullet

Ivan Zimmermann, an electrical engineer who served as chief of staff at Chile’s energy ministry until September, said that it will be essential to “generate a synergy” between public and private action, which will allow for long-term sustainable development of the industry.

“If this is not addressed as a state policy, it will generate socio-environmental conflicts in the territories that may hinder the healthy maturation of the technology,” Zimmerman explained.

H2 Argentina’s Villalonga also pointed to complexities and opportunities arising from the current geopolitical context, notably the effects of Russia’s war in Ukraine. As European countries encounter difficulties in disentangling from one of their main energy suppliers, energy security “becomes a value in itself” and opens the door to new market opportunities for Latin America, he said.

That is why the industry’s development will need to be thought through “strategically”, Uruguayan advisor Medina said, while the sector’s regulations are perfected, competitive energy prices for green hydrogen are achieved, and large-scale logistical issues are ironed out.

Moreover, with many countries moving in the same direction, said Uruguayan minister Paganini, both competition among emerging markets and “uncertainty” about the viability of green hydrogen initiatives will be further challenges faced across the sector in Latin America.