LATAM H2: THE GROWING IMPORTANCE OF LOW-CARBON HYDROGEN IN LATIN AMERICA
Partners Dan Feldman, Omar Samji, Roberta Berliner Cherman, counsel Gabriel Salinas and associate Humzah Yazdani have published a report on the Growing Importance of Low-Carbon Hydrogen in Latin America.
As the world increasingly commits to climate action, and governments and companies pledge net-zero emissions by or before 2050, it is clear that demand for hydrogen, an essential element of a low-carbon economy, is going to dramatically increase in industrial and consumer sectors across the world. The report focuses on hydrogen demand and production in Latin America and the factors that could enable Latin America to become a leader in the hydrogen economy.
- Latin America is quickly positioning itself to be a hydrogen market leader. While actual production to date has been limited, the region has significant potential hydrogen demand, adequate midstream infrastructure in place, and various sub-regions with hydrogen production potential that aim to become “hydrogen hubs” in the maturing global hydrogen supply chain.
- The vast majority of Latin American hydrogen demand is concentrated in the region’s five largest economies – Argentina, Brazil, Chile, Colombia, and Mexico – as well as in Trinidad and Tobago, which alone accounts for more than one-third of total demand. These locations, spread out as they are, are likely to become future hydrogen hub locations due to their existing importance in regional and international supply chains.
- According to the International Energy Agency’s baseline and accelerated modeling for Latin America, by 2030 pure hydrogen demand by country in Latin America is expected to double, and mixed hydrogen demand is expected to nearly triple. This rising demand is expected to catalyze much of the regional hydrogen infrastructure development.
- Once a low-carbon hydrogen economy has been established throughout Latin America, the region will be well-positioned to export excess production to the international market. International demand will likely be driven by the commitments of developed economies to decarbonize their energy sectors. Brazil, Chile and Mexico are presently among the ten largest renewable energy markets in the world, 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. With the right conditions in place, some Latin American countries could reach a competitive scaled-up green hydrogen production cost within the decade.
- Latin American countries are working hard to position themselves front-and-center as global producers. Regional governments recognize the future importance of lower-carbon hydrogen, and many have either published or are currently preparing national hydrogen strategies to address and overcome regulatory, infrastructure and offtake challenges.