LatAm H2 - The Growing Importance of Low-Carbon Hydrogen in Latin America

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LatAm H2: The Growing Importance of Low-Carbon Hydrogen in Latin America | September 2022 3 HYDROGEN PROJECTS IN LATIN AMERICA: A DUAL OPPORTUNITY Although the relevance of the topic spreads globally, this article focuses on one region in particular – Latin America. Long seen as an emerging market, Latin America is quickly positioning itself to be a hydrogen market leader. While actual production to date has been limited, the region has multiple natural advantages and various sub-regions with hydrogen production potential that aim to become "hydrogen hubs" in the maturing global hydrogen supply chain. Latin American countries have various levels of industrial development, hydrogen demand and hydrogen production. Almost 90% of the region's hydrogen demand in 2019 was concentrated in the region's five largest economies (Argentina, Brazil, Chile, Colombia and Mexico), and in Trinidad and Tobago, which alone accounted for more than 40% of total demand. 1 As global hydrogen demand rises, regional demand is expected to increase as well, from approximately 2,500kt of pure hydrogen and 1,600kt of mixed hydrogen per year in 2019, to around 3,800kt of pure hydrogen and 3,000kt of mixed hydrogen per year in 2030, as identified below by the International Energy Agency (IEA). The "2030 Accelerated" use case identified by IEA reflects an optimistic vision for the deployment of hydrogen end-use technologies and assumes the enactment of more ambitious energy and climate related policies and supporting mechanisms that could facilitate their implementation. HYDROGEN DEMAND BY COUNTRY LATIN AMERICA, 2019 HYDROGEN DEMAND BY COUNTRY LATIN AMERICA, 2019–2030 3,000 2,000 1,000 0 4,000 3,000 2,000 1,000 0 Pure Mixed Pure Mixed Pure Mixed Pure Mixed 2019 2030 Baseline 2030 Accelerated Argentina Brazil Chile Colombia Mexico Trinidad and Tobago Other Latin America Other Latin America Trinidad and Tobago Mexico Colombia Chile Brazil Argentina Aside from robust local demand, the dual advantage that Latin America has is the ability to produce large quantities of decarbonized molecules and to do so from a diverse range of sources. Although Latin America's industrial and oil refining sectors accounted for around 5% of global hydrogen demand in 2019, local production remains far from being green, having required more natural gas inputs than all of Chile's total gas reserves. 2 For Latin America to seize its hydrogen export opportunity, it must simultaneously shift towards lower-carbon hydrogen and fulfill local demand. There is movement in this direction already, as evidenced by projects such as Ecopetrol's first green-hydrogen pilot project at its Cartagena refinery, which is expected to use a 50kw proton exchange membrane electrolyzer, 270 solar panels and water used by the refinery to produce 20kg of high-purity green hydrogen to meet its own operational needs. 3 In Brazil, Unigel announced the start of construction of its first green hydrogen plant, which will be set up in the petrochemical complex of Camaçari, in the state of Bahia. The project has an initial announced investment of US$ 120 million and will have technology and an industrial system produced by German Thyssenkrup, with the equipment expected to be delivered in September of 2022. By 2030, local demand will likely expand to encompass further industries that currently use little or no hydrogen, such as transportation and iron, steel and cement production, creating the need for further increases in local supply. 1 IEA, Hydrogen in Latin America, 2021. 2 IEA, Hydrogen in Latin America, 2021. 3 Colombia's Ecopetrol Starts Green Hydrogen Project in Cartagena (kt H 2 /yr) (kt H 2 /yr) SOURCE: "Hydrogen in Latin America," IEA (2021).

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