Hydrogen take-off in Latin America: Chile, Mexico, Colombia y Brasil

Hydrogen take-off in Latin America
21 Dec 2022

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Latin America is one of the regions with the greatest potential or hydrogen take-off, development and implementation thanks to its geographical and climatic conditions which have also facilitated the development and implementation of renewable energies.

The introduction by some Latin American countries of emissions trading systems or the regulation of carbon taxes has made it easier for countries such as Chile, Colombia or Mexico to adopt regulatory measures and financial incentives in recent years to make it attractive to invest in non-polluting energies, especially green hydrogen.

However, the challenges for its launch and consolidation are similar to those existing in the UE and Spain: the need for a consolidated legislative framework that reduces bureaucracy and streamlines administrative procedures, government support, both at national and local level, with strong economic incentives in the form of grants or incentives.

Some countries have approved collaborative projects to boost the take-off of green hydrogen, such as the Ibero-American research network H2TRANSEL, which focuses on technologies for the production, transport, and storage of green hydrogen. Exploiting synergies between research groups and fostering knowledge transfer. Likewise, we also find collaborative platforms for the development of green hydrogen in Latin America, such as H2LAC, created in 2020 by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) together with the World Bank, ECLAC and the European Union's Euroclima+ Programme, which show this interest on a global scale to accelerate the development of green hydrogen in the region.

Likewise, consortiums have been created for cooperation between private entities, currently being the main driving force for the implementation of green hydrogen: H2AR consortiums (Argentina) H2Chile, the Costa Rican Hydrogen Alliance and hydrogen associations in Colombia, Mexico and Peru

All these bets for Latin America point to the fact that the region could become one of the most competitive in the take-off and production of green hydrogen.

Finally, in relation to the transport of green hydrogen, Argentina and Chile have great potential to take advantage of their energy integration networks, such an initiative is still in its embryonic stage.

Currently, the most advanced country, legally and technically, with respect to green hydrogen is Chile, followed by Mexico, Colombia, Brazil, Uruguay, and Argentina.

Hydrogen race in Latin American countries

Hydrogen in Chile 

Chile is much more advanced than Argentina, with the support of the Government for its take-off and development. It aims to produce 25 FW of hydrogen by 2030 and is one of the major references in the region in this field. At the end of 2020, it launched its National Green Hydrogen Strategy with short, medium and long term objectives.

It currently has 60 projects in different stages of development, some of them already in operation, aimed at both the export and domestic markets. One of the largest projects underway is the 10GW H2 Magallanes plant.

Hydrogen in México

The current regulation, despite containing gaps, is sufficiently mature for the development of green hydrogen projects, especially projects linked to photovoltaic plants that are serving industrial facilities.

Thus, there are several pilot projects in the areas of Baja California, Guanajuato, Chihuahua and Durango. In Guanajuato, the plan is to produce hydrogen through electrolysis with solar energy and inject it into a natural gas pipeline. The initiative aims to accelerate industrial decarbonization and serve as a transitional fuel.

The Durango project consists of generating hydrogen, in addition to ammonia, to integrate it into the industrial production of fertilizers. In Baja California, the goal is to produce the molecule for electrical energy storage, which is especially important for that area of the country that is relatively isolated from the national grid.

There is also a pilot project to produce green hydrogen in Sonora with electrolysis powered by an adjacent solar power plant.  Finally, a fifth project is in the initial development phase in Chihuahua in conjunction with a local cement plant.

As an intervention and control measure, the applicable regulations require various authorizations granted by national and regional authorities for electricity generation, interconnection to the grid, self-consumption, discharge, and distribution.

Hydrogen in Colombia 

The purpose of Law 2099 of 2021 is to modernize the current legislation on energy transition, the promotion of non-conventional energy sources and the economic reactivation of the country by strengthening the public energy and gas service.

The second chapter of Law 2099 regulates three essential measures for the launching and promotion of green hydrogen generation projects. As a first measure, activities for the promotion and development of non-conventional energy sources are declared of public utility and social interest. As a consequence, of the above, environmental procedures and the expropriation procedure for obtaining land are expedited.

In addition, the Non-Conventional Energy and Efficient Energy Management Fund (Fenoge) was created to promote, execute and finance plans and projects of Non-Conventional Energy Sources (FNCE). 

Finally,as a third measure, various tax incentives are granted to those who invest in the research, production and development of these projects, such as, for example, the possibility of deducting 50% of the investment made from income (Article 8), the exclusion of VAT on the acquisition of goods and services used in these projects (Article 9) and exemption from the payment of customs duties on imports of machinery and equipment (Article 10).

Hydrogen in Brasil

Brazil has great potential for the take-off and expansion of renewable energies in general and green hydrogen, as it is a major producer and exporter of this energy source.

In the National Energy Plan 2050 (MME), which was formulated in 2020, hydrogen is a key element in the country's decarbonization process. Furthermore, in February 2021, the Energy Planning Agency published a report detailing the main aspects to be considered to develop a Brazilian hydrogen strategy. It is entitled Fundamentals of a consolidation for a Brazilian hydrogen strategy.

Also, the National Energy Policy Council has prioritized hydrogen for research and development and in August 2022 has finally published a National Hydrogen Program.

The take-off and consolidation of green hydrogen in the Latin American market is definitely gaining momentum, as many long-term strategies are being developed with the aim of promoting its use as renewable energy.

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