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 4 HYDROGEN DEMAND BY APPLICATION LATIN AMERICA, 2019 HYDROGEN DEMAND BY APPLICATION LATIN AMERICA, 2019–2030 3,000 2,000 1,000 0 5,000 4,000 3,000 2,000 1,000 0 Pure Mixed Pure Mixed Pure Mixed Pure Mixed MeOH Production DRI 2019 2030 Baseline 2030 Accelerated NH3 Production Refining Cement Iron and Steel MeOH Production Transport Refining NH3 Production Once a local low-carbon hydrogen economy has been established and developed, the region will have the capability to export excess production to the international market. International demand will likely be driven by the commitments of developed economies ─ particularly Japan, South Korea, the European Union, and the United States of America ─ to decarbonize their energy sectors. Already, there is more than enough excess renewable energy capacity in Latin America to address a sizeable portion of this demand. Brazil, Chile and Mexico are presently among the ten largest renewable energy markets in the world in terms of investment, and there is a very strong pipeline of large-scale projects planned and under development with ample land, resource availability and political appetite to support continued growth. Due to their ample and competitive renewable energy resources, some Latin American countries have the potential to produce more low-carbon hydrogen than their economies can consume. The countries with the greatest low-carbon hydrogen production and export potential are Brazil, Chile and Argentina, which are best positioned to become green hydrogen exporters once an international trading market develops. While Mexico has a very high degree of investment, along with Brazil the two countries produce more than 80% of the region's steel output, and Mexico is therefore predicted to consume beyond its total low-carbon hydrogen production output in the near term. LATIN AMERICAN COUNTRIES HAVE GREAT EXPORT POTENTIAL (Green hydrogen production, domestic consumption and export potential) High Low Low Domestic Consumption High Importers Limited Potential Japan South Korea U.K. Italy New Zealand Germany Norway India U.S. Brazil France China Australia Chile Argentina Canada GCC Self-sufficient Exporters (kt H 2 /yr) Production Potential kt H 2 /yr Latin America's "double opportunity" consists of both local self-sufficiency and excess capacity for export- oriented projects. The opportunities are enhanced by the region's strategic geographic location, making it a practicable partner for shipping hydrogen at internationally competitive costs. SOURCES: IEA analysis based on data from the International Fertilizer Association, Wood Mackenzie, World Street Association Steel Statistical Yearbook, Argentinian Petrochemical Institute Yearbook, ANP (Brazil), and Sistema de Información Energética (Mexico), among others.

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