The rise of green hydrogen in Latin America

In anticipation of future demand, several projects are underway in the region to produce this clean energy source.
Knowable Magazine

This article was originally featured in Knowable.

Franklin Chang-Díaz gets into his car, turns on the radio and hears the news about another increase in the price of gasoline. But he sets off knowing that his trip won’t be any more expensive: His tank is filled with hydrogen. His car takes that element and combines it with oxygen in a fuel cell that works like a small power plant, creating energy — which goes into a battery to power the car — and water vapor. Not only will Chang-Díaz’s trip cost no more than it did yesterday, it will also pollute far less than a traditional gasoline-powered car would.

Chang-Díaz would like to have a public hydrogen station nearby whenever he needs to fill his tank, but that isn’t possible yet, either in his native Costa Rica or in any other Latin American country. He ends up instead at the hydrogen station he built himself, as part of a project aimed at demonstrating that hydrogen generated with renewable energy sources — green hydrogen — is the present, not the future.

A physicist, former NASA astronaut and the CEO of Ad Astra Rocket Company, Chang-Díaz has a clear vision. Green hydrogen, he believes, is a fundamental player in lowering emissions from transportation and converting regions that import fossil fuels — such as his small Central American country — into exporters of clean energy, key to avoiding the catastrophic effects of global warming.

According to data from the Inter-American Development Bank, the most polluting sectors in Latin America to which clean hydrogen technology could be applied are transportation (which generates 40 percent of the region’s CO2 emissions) and electricity and energy (36 percent of emissions). And Chang-Díaz is not alone in his belief in the promise. Large-scale hydrogen transportation will be part of the future, says Nilay Shah, a chemical engineer at Imperial College London. “By 2050, hydrogen could deliver 18 percent of the global energy supply … 28 percent of which would be destined for the transport sector,” he and his colleagues note in an article on the application of hydrogen in mobility technologies in the 2022 Annual Review of Chemical and Biomolecular Engineering.

But for green hydrogen to become an important player in the world’s energy resources, the technologies for obtaining it will need to be developed on a large scale. Latin America wants to be part of this future and is already preparing, with projects throughout the region.

Not all hydrogen is the same

Hydrogen is the lightest chemical element: Its nucleus has only one proton, orbited by an electron. It’s also the most common: Up to 90 percent of the atoms in the universe are believed to be hydrogen atoms. In its gaseous state (H 2), it is tasteless, colorless and odorless. In the terrestrial environment, it is usually found in more complex compounds, such as two hydrogen atoms bonded to one oxygen atom to form a water molecule (H 2O), or four hydrogen atoms bonded to one carbon atom to form methane (CH 4). If we need the hydrogen atoms alone, we must uncouple them from these compounds.

The use of hydrogen as an energy source is not new. For decades, NASA mixed H2 gas with oxygen to generate the energy needed to lift hundreds of tons and send its shuttles into space. The US Department of Energy lists it as a safer fuel than fossil fuels because it is non-toxic and dissipates quickly in the event of a leak, since it is lighter than air.

At present, hydrogen as an energy source is mainly used in the production of petroleum derivatives, steel, ammonia and methanol. According to data from the International Energy Agency (IEA), in 2020 the world’s population consumed about 90 million tons of hydrogen — equivalent to only 2.5 percent of global energy consumption. Latin America uses only 5 percent of this hydrogen, mainly in countries such as Trinidad and Tobago, Mexico, Brazil, Argentina, Venezuela, Colombia and Chile. It is mostly dirty hydrogen, which pollutes the planet due to the processes used to obtain it.

Green hydrogen is produced using energy from renewable sources — such as hydroelectric, solar or wind power. Through a process known as electrolysis, this clean electricity separates water into its two constituent elements: oxygen and hydrogen. The hydrogen is then stored and transported. It can be used directly in industrial processes; be combined with other elements to create synthetic fuels; or be mixed with oxygen to generate electricity again, as is the case with hydrogen fuel-cell cars.

Depending on how it is derived, hydrogen can be classified as gray, blue, green — or even black. Gray hydrogen is generated using fossil fuels — natural gas especially, in the case of Latin America. In a process called steam reforming, carbon monoxide (CO) and water vapor (H2O) are subjected to high temperatures, moderate pressure and a catalyst, producing carbon dioxide (CO 2) and hydrogen (H 2). If coal is used instead of gas to generate the heat necessary for steam reforming, the hydrogen is then considered black — the worst of all, from an environmental point of view.

Blue hydrogen uses gas or coal in the same steam reforming process, but in this case 80 percent to 90 percent of the carbon emissions end up underground through a process called industrial carbon capture and storage (CSS). Finally, green hydrogen — also called clean hydrogen — uses electrical energy generated by renewable sources, such as solar and wind power, to separate the water molecule into its two elements, hydrogen and oxygen, by means of an anode and a cathode in a process called electrolysis.

Currently, less than 0.4 percent of the hydrogen utilized in Latin America is green; the rest is linked to fossil fuels. In fact, in 2019, hydrogen production for the region required more natural gas than all of the gas consumed in Chile, a country with 19 million inhabitants. And it generated more polluting emissions than those produced in a year by all the cars in Colombia, a nation with some 7 million vehicles.

Globally, 4 percent of hydrogen production is already the result of electrolysis, but the remaining 96 percent still requires gas, coal or petroleum derivatives.

Toward green hydrogen

With the goal of producing more and more green hydrogen, several projects on different scales are taking shape in Latin America.

  • The Brazilian company Unigel plans to inaugurate a $120 million plant in 2023, which will produce 10,000 tons per year of green hydrogen — the equivalent of 60 megawatts (MW) — in its first stage.
  • Sener Ingeniería Mexico announced in August 2022 the creation of the first of a series of small plants, of about 2.5 MW.
  • Chile, for its part, is already seeing some of the fruits of its National Green Hydrogen Strategy, launched in 2020. This South American country says it plans to “conquer global markets” in 2030, mainly Europe and China, where it aims to send 72 percent of its production. The port of entry to Germany will be Hamburg. “With its great potential for green hydrogen production, Chile is on the verge of becoming an exporter of global magnitude,” said the mayor of Hamburg, Peter Tschenscher, during the signing of a cooperation agreement in September 2022.
  • Uruguay launched the Green Hydrogen Sector Fund, with $10 million non-reimbursable funding from the government to finance projects. In August 2022, nine companies won a spot, some with names such as “Green H 2 Production for Forest Transport” and “Palos Blancos Project: green hydrogen, ammonia and fertilizer production plant with wind and solar photovoltaic renewable energy.”
  • And in Costa Rica, Chang-Díaz is helping lead the way to add green hydrogen to the country’s portfolio of clean energy sources (about 99 percent of electricity in Costa Rica is generated through sources such as the sun, wind and water from dams). In July 2022, Chang-Díaz demonstrated on social media how he fueled his car, at a prototype station, with green hydrogen produced in his own country.

While some Latin American countries may benefit from the production of green hydrogen, others will benefit from large-scale consumption of the clean energy source. For example, Trinidad and Tobago, which consumes 40 percent of the region’s hydrogen for its oil refining processes, emits 12.3 metric tons of carbon per person per year (by comparison, Costa Rica emits 1.6 metric tons per capita per year, according to 2019 World Bank data). If Trinidad and Tobago used green hydrogen in its processes instead of gray hydrogen, its carbon footprint would be significantly reduced.

Although hydrogen can be produced with renewable energy throughout Latin America, in certain countries  — such as Mexico, Chile, Argentina, Peru, Bolivia and Brazil — the availability of solar, wind or hydroelectric power will make the process more cost-effective.

Other countries are being creative and are not yet focusing on either production or consumption of green hydrogen. Panama, for example, seeks to become a storage and commercialization node for the element, like the air and maritime transport hub it already is. As part of this national energy transformation plan, called Green Hydrogen Roadmap, the authorities of this country signed a memorandum of understanding with Siemens Energy. Panama also has plans to produce some of its own green hydrogen eventually: The Ciudad Dorada Biorefinery, expected to begin construction this year, will have the capacity to generate 405,000 metric tons.

“Green hydrogen technology is developing worldwide and by 2030 Latin America will be the third region in the world with the most projects, after Europe and Australia,” says José Miguel Bermúdez, chemical engineer and energy technology analyst at the IEA.

For Shah, the reason for this growing interest is clear: Many Latin American countries have the potential to generate more clean energy than they need. “Let’s take Chile, for example,” he says. “The amount of potential for renewable electricity is probably 10 times more than the amount of electricity you need in the country.” Exporting that clean energy from Chile or Costa Rica in the form of electricity over long distances is complicated and expensive. But using it to create hydrogen and transport it in tanks to practically any place in the world is realistic, he says, although it will require investments — just as investments in oil tankers and gas pipelines were once needed.

But, Shah adds, green hydrogen could also be transported with existing infrastructure if it is used to create popular products, such as ammonia (NH3, a nitrogen atom bonded to three hydrogen atoms, a compound widely used in agriculture) or synthetic fuels.

Challenges to be solved

After the production and distribution of green hydrogen comes its myriad uses. To power car batteries, it’s combined with oxygen in a fuel cell and generates water vapor and energy. To manufacture iron, hydrogen is used to transform one molecule of iron oxide (Fe2O 3) into two molecules of iron (Fe) and three molecules of water (H 2O) at high temperatures — fossil fuels are currently used for this purpose. Processing this iron further, with more energy, produces steel.

The manufacture of cement also requires high temperatures, currently generated with fossil fuels: The IEA indicates that as much as 67 percent of hydrogen demand in 2030 could come from this industry. In addition, hydrogen combined with carbon in the Fischer-Tropsch process generates synthetic fuels, which are cleaner than traditional fossil fuels. Aircraft are already allowed to fly on up to 50 percent synthetic kerosene.

Some 50,000 hydrogen vehicles are already on the road worldwide, Bermúdez adds. Projections are that the number will soon skyrocket — China alone expects to have 1 million on its streets by 2035 — but experts agree that, in the short or medium term, hydrogen will not completely replace the most polluting fuels; instead, it will be one alternative in a matrix of different options, such as traditional electric cars or solar-powered airplanes. However, the experts also agree that it will be a significant option, not a marginal one.

“There will be a series of technologies and areas of opportunity that do not have to be specifically the same in all the countries of our region,” says Andrés González Garay, a process engineer at the chemical company BASF and a coauthor of the article on hydrogen production and its applications to mobility in the Annual Review of Chemical and Biomolecular Engineering. “It is also true that hydrogen, although it can be applied in a lot of areas, will not make sense in all of them, and it will depend a lot on our political, social and economic systems.”

The International Energy Agency expects Latin America to become one of the world’s most important clean hydrogen export zones by 2030. Chile is one of the countries with the greatest potential and already has some exports of this product.

To arrive at the more environmentally friendly scenario that green hydrogen offers, its production should be increased as soon as possible and, at the same time, its consumption needs to be encouraged, Shah says. “Global hydrogen production is expected to grow six to 10 times between now and 2050,” González Garay says, and the increase is projected to be mainly in clean hydrogen.

The role of governments will be pivotal, the scientists say. “If governments become the first users of hydrogen — for their buildings, for their vehicle fleets, for their other operations, for power generation — they become the customer. Then they can create the supply chain of hydrogen and give confidence to the producers that there is a market,” Shah says.

Adds Bermúdez: “The public sector needs to put the regulations and support programs in place to accelerate the private sector. Public policies are needed to force demand for green hydrogen…. If Latin America does not position itself well and start producing and closing agreements, it runs the risk of being left behind.”

Chang-Díaz, for his part, fears that countries like Costa Rica, despite producing almost all its electricity through clean renewable sources, risk moving too late to take advantage of the wave of green hydrogen that is already beginning to rise. In December 2022 he participated as a speaker at an international meeting held in San José, the capital of his country. But at the same time, a few kilometers away, the bill to support the green hydrogen sector, which has been under discussion for months, has not advanced in the Legislative Assembly.

So, at least for now, Chang-Díaz will remain the only one in his country who can travel in a car that uses green hydrogen as fuel.

This article originally appeared in Knowable Magazine, an independent journalistic endeavor from Annual Reviews. Sign up for the newsletter.