Colombia’s vast natural resources and strategic location, combined with favourable government policy, could soon transform the country into a globally competitive green hydrogen exporter and domestic production hub.

By 2030, the government aims to build 1–3GW of green electrolysis capacity at a production cost of $1.7/kg of green hydrogen. A 2023 analysis supported by the German government found that only the Rio Grande do Norte region of northern Brazil has better global resource potential.  

“According to the International Renewable Energy Agency [IRENA], Colombia is expected to have the world's fourth-lowest hydrogen production cost by 2050, behind only China, Chile and Morocco,” said Ben Hiorns, an Americas intelligence analyst at geopolitical risk consultancy Dragonfly. “Its location also offers logistical advantages for becoming a significant global exporter.”

“Colombia is expected to have the world’s fourth-lowest hydrogen production cost by 2050” Hiorns, Dragonfly

The northern department of La Guajira is particularly well-suited to green hydrogen. The government estimates onshore wind capacity potential of at least 25GW, with solar capacity potential reaching 45GW. The peninsula boasts double the average global wind speed as well as consistent solar radiation of 6 km/m², a figure 60% higher than the world average.  

Other areas of the Caribbean coastline are also well suited to becoming production hotspots. The cities of Cartagena and Barranquilla are close to existing demand centres, while Valle del Cauca on the Pacific coastline could be attractive due to residual biomass produced from the region’s sugarcane sector as well as strong export options.

“Many other areas of the country seem suitable, such as departments along the Caribbean coast which offer high levels of solar irradiance, or areas in the mountainous Andes region which offer potential for hydroelectric power generation,” added Hiorns. Of the 28 projects already under development, 16 are located in the Caribbean region and six in the Andes.

Policy in motion  

Beyond resource potential, Colombia already leads many of its regional counterparts in policy support. In 2021, the government released its hydrogen roadmap, aimed at establishing a dynamic ecosystem, and hopes to shift away from fossil fuel dependence.  

“Current and past governments have demonstrated their dedication to participate in the global climate change agenda, with objectives to reduce carbon emissions by 50% by 2030, [as well as] reach carbon neutrality by 2050,” said Laura Torres Restrepo, associate at global law firm Baker McKenzie. “Some of the crucial points of the roadmap are commitments to set up legal and regulatory facilitators, develop tools to stimulate market growth, assist in the establishment of necessary infrastructure, and promote the advancement of technical and industrial sectors.”

Hydrogen production crucially also has bipartisan support. “A significant reversal seems unlikely, even if a conservative candidate wins the next presidential election in 2026,” explained Hiorns. “The country’s green hydrogen roadmap was started [under] the previous conservative government, which suggests even right-wing leaders are likely to recognise the importance of developing green hydrogen for the country’s economy.”

More recently, Colombian President Gustavo Petro has also criticised the country’s economic dependence on fossil fuels and hopes to phase out their use. Under his tenure, Colombia is projected to face gas shortfalls towards the latter half of this decade unless production and upstream investment can be revived.

If Petro stands in the next election and wins, green hydrogen would be one potential low-carbon alternative to avoid increased government spending on upstream production. Clean hydrogen is seen as one low-carbon measure to help ensure Colombia’s long-term energy security.

Even if a conservative candidate does win the 2026 election, the global net-zero agenda also makes it more prudent to promote diversity of energy supply rather than depend on a dwindling resource that faces stiffer competition to attract long-term investment.

Aware of the geopolitical implications, the Petro regime has been courting favour with international allies, including Japan. In March, the authorities announced the creation of the Steering Committee of the High-Level Green Hydrogen Group, an alliance with Germany to collaborate on green hydrogen production and technology. Colombian minister of finance, Ricardo Bonilla, was also in London in April to try and attract new investment for the country’s emerging clean hydrogen sector.   

Local demand

Incentivising local industry demand has to be one of the immediate priorities to kickstart green hydrogen production. Last year, around 87% of domestic hydrogen production went to the refining sector, with the remaining demand mostly soaked up by the fertiliser sector.

In the short term, the bulk of Colombia’s low-carbon demand will be replacing grey hydrogen, produced from natural gas, with blue hydrogen derived employing CCS. In 2022, NOC Ecopetrol began the process with a 50KWh pilot project in Cartagena.     

$1.7/kg – Production cost target

By 2040, the government expects domestic consumption to grow to 790,000t/yr, a more than fivefold increase. According to the government’s hydrogen roadmap, a good chunk of that will come from the transport sector, accounting for 64% of total demand by mid-century. Out of 28 projects under development, four are already targeting the mobility sector.

The main issue is that more than 98% of Colombia’s offtake demand comes from just two companies: Ecopetrol and fertiliser manufacturer Yara. There is also still no legislation requiring the replacement of grey hydrogen and little incentive to switch.  

“The government should consider setting up policies to incentivise local demand for green hydrogen,” said Claudia Navarro Acevedo, partner at Colombian law firm Brigard Urrutia. “[These could range from] setting up a minimum percentage of hydrogen and natural gas blends, to [creating] a task force to review tariff conditions as well as quality and security issues surrounding the injection of hydrogen into the natural gas infrastructure.”

Enhancing legacy infrastructure

Investment in infrastructure will also be crucial. “We do not have the maritime or fluvial ports to mobilise hydrogen within our country abroad,” said Acevedo. “This particular consideration was not included in the recent ports policy, therefore it would be important for the industry to start considering investing in new infrastructure that allows [ports] to become hubs for hydrogen exportation.”

Colombia’s energy grid will likewise need expanding to help provide the energy needed for green hydrogen projects. “The Colombian Energy Planning Unit announced on 17 May that it had received 1,705 requests for energy transport capacity allocation,” said Restrepo. “Grid expansions are also required for the current government plan to install 6GW of renewable energy.”

Working closely with local communities will similarly be crucial. Historically, there has been opposition from local communities in La Guajira to renewable energy projects, rooted in economic inequality and poverty. As an example, Enel Green Power’s Windpeshi wind project was put on indefinite hold after construction delays caused by local resistance.

“Local indigenous groups have tried to disrupt operations at oil extraction sites in Colombia in the past,” noted Hiorns. “Such activity will likely reoccur if the financial benefits from green hydrogen production are not seen in these communities.”

Acevedo agreed, adding that “the issue with these potential hotspots is that communities surrounding the projects have problems accessing clean water and electricity. It would be wise to allow these communities to benefit from energy production and clean water accessibility so that social licensing [can be] obtained.”

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Author: Marat Aslan