Cite report
IEA (2024), Global Hydrogen Review 2024, IEA, Paris https://www.iea.org/reports/global-hydrogen-review-2024, Licence: CC BY 4.0
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Latin America in focus
Highlights
- Latin America and the Caribbean (LAC) is well-placed to produce low-emissions hydrogen and its derivatives, building on its abundant natural and renewable energy resources and largely decarbonised electricity mix (of which 60% comes from renewables). In 2023, hydrogen demand in the region reached 4 Mt, mostly for use in oil refining and chemicals manufacturing. Almost 90% is produced using natural gas, which contributes to the region’s reliance on imports.
- Today, 80% of nitrogen-based fertiliser demand is met by imports, with a trade deficit equivalent to up to 0.4% of GDP. Domestic low-emissions ammonia production could reduce this deficit and improve price stability. LAC holds one-fifth of the world’s iron ore reserves, with high-grade ores suitable for hydrogen-based direct reduced iron (H2-DRI). In some world regions, importing hot briquetted iron from LAC instead of iron ore could cut the cost of reduced iron by almost a third.
- Opportunities differ by country. Mexico and Colombia, for example, could leverage large existing hydrogen demand from refineries. Chile’s mining sector could use low-emissions hydrogen to decarbonise operations, such as for the production of ammonium nitrate for industrial explosives and for heavy machinery. Brazil accounts for 90% of iron ore trade from LAC and is therefore uniquely positioned to develop H2-DRI for steelmaking. The country’s biogenic CO2 resources are more than sufficient to meet domestic needs for synthetic fuels and urea, opening up export potential. Panama could become a hub for low-emissions shipping fuels and is already targeting 5% of bunkering from hydrogen derivatives by 2030.
- Deployment is still nascent. Based on announced projects, LAC could produce over 7 Mtpa of low-emissions hydrogen by 2030, but only about 0.1% of these projects is in operation, under construction or has reached a final investment decision (FID). The high cost of capital in the region remains a barrier, and could undermine the competitive production costs from its strong renewable resources. In addition, a massive expansion of renewable capacity would be needed – if all hydrogen projects in the pipeline come to fruition, wind and solar PV generation would need to increase by 140% within this decade for hydrogen production alone.
- Action is required in the short term to unlock LAC’s potential, balancing domestic demand with export ambitions. Demand creation measures can help close the cost gap, improve energy security by reducing imports of natural gas and ammonia, and create higher value-added export opportunities. Hydrogen hubs can drive economies of scale and integrate supply chains while accelerating learning.