IEA report – hydrogen in Latin America.
The momentum for low-carbon hydrogen is growing in Latin America, with many countries currently developing long-term hydrogen strategies and a project pipeline of more than 25 projects, including several gigawatt-scale projects to export it beyond the region.
In this report we analyse both the region’s potential to play a major role in the future low-carbon hydrogen landscape, and the role that low-carbon hydrogen could play in Latin America’s own clean energy transitions.
Low-carbon hydrogen deployment depends on many technologies that are still under development, and considerable cost reductions will be needed to enable it to reduce global emissions in applications that may not be suitable for director electrification.
The next decade will be crucial for the long-term promise of low-carbon hydrogen in Latin America, and much can be done to develop and demonstrate emerging technologies and prepare the ground for their future scaling up.
We conclude the report with a series of six recommendations for policy makers in Latin America to harness the potential of low-carbon hydrogen in the region.
READ the latest news shaping the hydrogen market at Hydrogen Central
Latin America1 is one of the world’s leading regions for renewable energy use today and one that can play a major role in the international push for low-carbon hydrogen, a crucial element of a global net-zero emissions future.
In this context, low-carbon hydrogen has been gaining attention from policy makers in the region, mainly due to Latin America’s long-term potential to produce large volumes of competitive low-carbon hydrogen and export it to other global markets.
At the time of writing, 11 countries2 in the region have either published or are currently preparing national hydrogen strategies and roadmaps, and a pipeline of more than 25 low-carbon hydrogen projects are at the early stages of development.
Low-carbon hydrogen can also play a crucial role in Latin America’s own clean energy transitions, which have been gaining momentum in recent years, with many countries announcing ambitious new climate and energy goals and taking steps to translate these objectives into action. In the coming decade, variable renewables, energy efficiency and direct electrification will continue to drive emissions reductions in the region based on existing technologies.
Beyond 2030, decarbonisation efforts will increasingly rely on technologies that are not commercially available today. These include low-carbon hydrogen applications that could substitute fossil fuels where direct electrification may present implementation challenges, and to further support the integration of renewables by providing long-term energy storage, among other applications.
The next decade will be crucial for the development, demonstration and initial deployment of these emerging technologies, before they can be scaled up in a cost-competitive way.
Although hydrogen does not emit carbon dioxide (CO2) at the end-use stage, current production processes are already responsible for large volumes of emissions in the region. Latin America’s industrial and oil refining sectors required more than 4 Mt of hydrogen in 2019 (around 5% of global demand), mainly to produce ammonia, methanol, steel and refined oil products.
In 2019 hydrogen production in the region required more natural gas than Chile’s total gas supply, and released more CO2 into the atmosphere than all of Colombia’s road vehicles. Almost 90% of the region’s hydrogen demand in 2019 was concentrated in the region’s five largest economies3 and in Trinidad and Tobago, which alone accounted for more than 40% of total hydrogen demand.
In 2019 low-carbon hydrogen production was limited to three pilot projects in Argentina, Chile and Costa Rica. To meet the region’s energy and climate goals, low-carbon hydrogen will have to replace existing carbon-intensive hydrogen production in the region and meet additional demand for new uses in the coming decades.
Low-carbon hydrogen production could increase substantially based on the current project pipeline, which includes at least five large, gigawatt-scale projects to produce low-carbon hydrogen from renewable electricity, targeting export markets rather than domestic demand.
To have an impact on Latin America’s own clean energy transitions, local end-use sectors should also benefit from the region’s competitive advantages in low-carbon hydrogen production, helping them reduce emissions, find new opportunities and create jobs in a net-zero emissions world.
Hydrogen’s versatility as an energy carrier allows each country to tailor its deployment strategy to its own context and long-term priorities, providing opportunities to leverage its own strategic advantages, industrial value chains, technological capabilities and infrastructure.
Hydrogen in Latin America, August 18, 2021
