Recommendations for policy makers

The next decade will be crucial for the long-term prospects of hydrogen in Latin America’s clean energy transitions. Governments can take action now to ensure that their countries are ready to harness hydrogen’s long-term decarbonisation potential, and that it creates opportunities for economic and social development for their citizens.

Considering the early stages of maturity of several end-use technologies, new applications for hydrogen may not have a sizeable impact on emissions by 2030, but their long-term decarbonisation and economic development potential is considerable, particularly in industry and transport. In the following sections we present the report’s conclusions in the form of recommendations for policy makers seeking to develop hydrogen in Latin America.

Define a long-term vision for hydrogen in the energy system

National strategies and roadmaps are vital to orient the development of hydrogen towards the sectors and applications that are most relevant to each country. These strategic documents should:

 Consider all steps of the hydrogen value chain, from production to end uses, including existing hydrogen demand in the country.

 Identify strategic sectors and opportunities in the short, medium and long term, together with their regulatory and infrastructure needs

 Establish credible but ambitious targets and milestones, covering both low-carbon hydrogen production and existing and future demand in key sectors, and include mechanisms to track progress and revise them as technologies reach maturity

 Ensure alignment with a wider decarbonisation strategy, and complementarity with policies and programmes to promote other clean energy technologies that could be the main drivers for decarbonisation in certain sectors, such as direct electrification in transport.

 Develop a vision for the country’s position in the future hydrogen industry, considering technological and industrial capabilities and opportunities to leverage existing infrastructure and value chains, and support the creation of national and regional ecosystems to facilitate early deployment

 Consider developments in other parts of the region and seek complementarities and synergies

 Establish co-ordination mechanisms with the private sector, including financial services, to ensure their investments and initiatives complement public sector-led efforts, are aligned with strategic objectives and create opportunities for citizens.

Identify near-term opportunities and support initial deployment of key technologies

While hydrogen technologies are not expected to have a major impact on Latin America’s energy systems in the short term, the actions that policy makers take between now and 2030 will be crucial to harnessing their long-term potential for emission reductions and economic opportunities.

Decarbonising current demand is a major opportunity to ramp up low-carbon production and reduce emissions in the near term. For new uses, small-scale pilot projects are crucial to unlock new technologies that could drive demand in the longer term. In countries with little existing demand for hydrogen, initial efforts should focus on technologies that could have a significant impact on emissions in the longer term, such as heavy transport, shipping and aviation. Governments can also support the initial creation of hydrogen ecosystems by establishing public registries and matchmaking initiatives aimed at connecting companies and institutions interested in incorporating hydrogen technologies into their activities, including across national borders.

Retrofit

Low-carbon fuel standards

Renewable

Late

Chemical production use

Feedstock for ammonia and methanol production, and used in several other smallerscale chemical processes

Iron and steel

DRI-EAF process route accounts for 14% of the region’s crude steel production and requires hydrogen in a mix of gases

Transport

Limited to 2 fuel cell buses (in Brazil and Costa Rica) and 4 fuel cell cars in Costa Rica

Note: ZEV = zero-emissions vehicle.

Low-carbon hydrogen supply

Challenges

Policy/ regulatory actions

Timeframe for large-scale deployment Opportunities

For ammonia production: Retrofit (or build new) hydrogen production with CCUS Mix electrolytic hydrogen into existing natural gas-based production

Availability of CO2 transport and storage sites

Hydrogen storage is needed to use electrolytic hydrogen beyond process flexibility limits

Urea and methanol production will still require a source of carbon

Low-carbon fertiliser labels/certification

Fiscal incentives

Carbon pricing

Public support for CAPEX/OPEX

Low-carbon steel labels/certification

Late 2020s

Retrofit DRI facilities with CCUS, or inject electrolytic hydrogen into existing natural gas-based production Blend electrolytic hydrogen by injection into blast furnaces

Impact on margins in a sector facing strong competition from producers outside the region

Low-carbon public procurement schemes

Grants/R&D funding

Fiscal incentives

Carbon pricing

Public support for CAPEX/OPEX

ZEV mandates

Late 2020s (for hydrogen blending in blast furnaces and DRI)

Post-2030 for 100% hydrogen DRI

Hydrogen could help decarbonise transport modes where direct electrification is not an option

Cars and buses can contribute to near-term demand for hydrogen, while trucks and shipping are possible largerscale demand in the long-term

Further technological improvements needed

Infrastructure requirements

High impact of fuel costs on margins

Regional compatibility for cross-border applications

ZEV public procurement schemes

Differentiated vehicle registration taxes

Low-carbon fuel standards

Direct purchase subsidies or support schemes to build refuelling infrastructure

Differentiated port charges and transit fees (shipping)

Late 2020s for LDVs and buses

Post-2030 for long-distance applications (trucks and shipping)