Unlocking LatAm’s hydrogen potential: ‘Speed is of the essence’
For the third consecutive year, BNamericas caught up with US-headquartered New Energy Events ahead of its annual Latin American hydrogen conference.
Being co-hosted by IDB and supported by the World Bank, European Investment Bank and CAF, among others, H2LAC 2024 is the biggest event of its kind, bringing together hydrogen decision-makers from across the region.
This year's event will take place in Chilean capital Santiago.
Given its abundant wind and solar power potential and available land, Latin America is well-positioned to ride the hydrogen wave and become a key producer of green hydrogen and exporter of its derivatives. The focus today is on slotting other critical pieces of the jigsaw puzzle into place, chiefly in the spheres of finance, regulations and offtake.
Chile, which recently launched its 2023-30 green hydrogen action plan, is in the regional green hydrogen vanguard.
Francisca Salas, director of the hydrogen and decarbonization program of New Energy Events, gives BNamericas a snapshot of the state of play and challenges for the region.
H2LAC 2024 is being held in Santiago from June 5-7. Click here for more information.
BNamericas: This is our third annual event interview. What progress have you seen in the green hydrogen space in Latin America since H2LAC 2023?
Salas: Over the past months, significant developments have unfolded in the green hydrogen sector. Argentina launched its hydrogen strategy, Mexico introduced guidelines for its own strategy, and Peru passed a special bill requiring all government branches to collaborate on a hydrogen strategy. Despite these initiatives, what we’re still missing – albeit with some exceptions in northern Brazil and Chile – is construction and production at scale.
What we do see, though, is a deeper understanding of the industry, the market, and what it’s going to take to get it done. Discussions now extend beyond just hydrogen to include a broader spectrum of topics such as green ammonia, methanol, and efuels. Similarly, the financial players – investors and bankers – are beginning to get to grips with the sector.
Ultimately, the real progress lies in the enhanced understanding of the entire value chain and how the pieces fit together.
BNamericas: Last year the demand side was identified as a major hurdle not only in Latin America but also globally. That’s surely still the case?
Salas: Yes, it is still the primary challenge. We’re yet to see the development of an offtaker market in LatAm – although numerous initiatives and discussions are underway.
Similarly, it’s too early to predict what sort of export market we can grow internationally. One thing is for sure: speed is of the essence. We need to be able to offer green, clean and competitive H2 to offtakers and international counterparts as swiftly as possible.
BNamericas: Latin America now has projects, some quite advanced. The focus seems to be tightening on finance. In the framework of the conference, you are working with several multilateral institutions, including LatAm-focused CAF and IDB Invest. In terms of kickstarting green hydrogen industries, how important a role do development banks have in the region and can you give us a broad overview of what types of products they are offering or may offer in the region?
As it stands the participation of the [development finance institutions] DFIs is critical. Just as they – IDB, World Bank, CAF, EIB et al – form the backbone of our flagship hydrogen conference H2LAC so they stand behind both policy and regulatory initiatives (for example, IDB’s CertHiLAC program, a certification system for low-carbon H2 production in the region), as well as providing concessional finance to the private sector (HDF’s project in Barbados is a good example). In short, they’re the difference and one of the region’s competitive advantages as it begins to build out the industry.
BNamericas: On a related topic, countries in Latin America, it seems, have limited subsidy firepower. Is there a general consensus on what they can do instead to help attract investment? Tax incentives, for example, are often mentioned.
Salas: No, there’s no general consensus. But we can boil it down to some basics. Develop a good plan. Get buy-in across the board from the public and private sector alike. Understand your competitive advantages and disadvantages; plan accordingly.
Understand who’s going to be your buyers; determine how to deliver. You’ve heard it all before. Ultimately, at a country level and regionwide, we need commitment and urgency. Others are surging ahead; we can’t afford to be left behind.
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