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29 Jan 2025

Hydrogen Market Databook 2025: Central & South America

Central and South America has several potential advantages to building a hydrogen value chain and economy—the foremost of these being a vast amount of renewable energy.

According to the IEA, 60% of the region’s electricity is generated from renewables (hydropower, solar and wind). This robust energy source is paramount to building new green hydrogen production capacity and infrastructure. However, the sheer cost of renewable energy builds, electrolyser installations, green hydrogen distribution networks and other infrastructure can be staggering.

Many Central and South America nations are unable financially to build domestic hydrogen ecosystems and, much like Africa, they may need international partnerships to fully build out a green hydrogen value chain. In addition, other challenges exist, including workforce development issues and a lack of standards and certifications, among others.

Despite these challenges, Central and South American countries are trying to develop their domestic renewable energy infrastructure and subsequent green hydrogen value chain. At the time of publication, the GEI database was tracking nearly 60 active hydrogen projects in the region, comprising 4% of total active hydrogen project market share globally. Most projects are in Brazil and Chile. These two countries account for 60% of the market share in active projects in the region, followed by Uruguay, Paraguay, Argentina and Mexico (see Fig.1).

Brazil

In August 2023, Brazil launched its National Hydrogen Programme (PNH2), a three-year action plan (2023–25) for the development of low-carbon hydrogen in the country. PNH2 envisions a significant rise in low-carbon hydrogen plants throughout the country, aiming for hydrogen pilot plants to be in every region of the country by 2025. The Brazilian government hopes PNH2 will lay the groundwork for the massive production of both renewable energy and low- and zero-carbon hydrogen generation. The country has set its sights on developing several hydrogen hubs by 2035.

PNH2 identified three primary objectives to boosting Brazil’s hydrogen economy: legal framework, research and financing. The country’s legal framework for low-carbon hydrogen was signed into law in August 2024. This bill established a regulatory framework and incentive mechanisms for the domestic low-carbon hydrogen sector, including the definition of low-carbon hydrogen, renewable hydrogen, hydrogen derivatives and hydrogen carriers. The bill also appointed Brazil’s Agency of Petroleum, Natural Gas and Biofuels (ANP) to be the authority to regulate and authorise the nation’s hydrogen production and other activities related to distribution, export, sales, derivatives and much more. PNH2 also set up a hydrogen certification system that will indicate the level of greenhouse gas emissions associated with a company’s hydrogen production’s lifecycle.

PNH2 established a special tax incentive called the Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro). It also enables hydrogen infrastructure projects to receive tax benefits under Brazil’s Special Incentive Regime for Infrastructure Projects. Hydrogen project developers can receive special tax benefits on imported equipment and construction materials. To obtain tax breaks under Rehidro, hydrogen developers must have their project verified/qualified as low-carbon hydrogen production, a minimum percentage of local content must be used, and the developer must invest in research and innovation.

Before the passing of PNH2, Brazil already had approximately $30b in low-carbon hydrogen projects (green and blue production pathways) under development, with several including carbon capture, according to government data. Many of the nation’s projects are in various zones designated as potential hydrogen hubs. These include the states/ports of Bahia, Pecem, Pernambuco, Rio Grande do Norte and the Port of Acu, among other regions. Brazil’s hydrogen hubs will include several capital-intensive projects:

FRV’s $5b hydrogen Cumbuco project. The two-phase development includes 2GW of electrolyser capacity to ultimately produce approximately 2mt/yr of green ammonia by 2030.
Cactus Energia Verde’s $5.4b project in Pecem. Once operational, the facility will produce 120,000t/yr of green hydrogen.
Enegix Energy’s $5.4b, 600,000t/yr Base One green hydrogen project in the state of Ceara.
Grupo Jepri’s $3.6b green hydrogen project at the Pecem Industrial and Port Complex. The project is scheduled to be completed in early 2027.
Green Energy Park’s 5mt/yr green ammonia complex in the state of Piaui.
Unigel’s $1.5b Camacari green hydrogen/ammonia project. Once completed, the plant will produce 100,000t/yr of green hydrogen and 600,000t/yr of green ammonia.
Fuella’s plan to build two green ammonia production plants, each with a capacity to produce 400,000t/yr. One is a $1.5b plant at the Port of Pecem, with the other at the Port of Acu. Efuels company HIF also plans to build an 800,000t/yr e-methanol plant at the Port of Acu.

These projects, along with dozens of other hydrogen production and infrastructure projects, will enable Brazil to bolster its domestic hydrogen value/supply chains. They will not only produce and distribute/export green hydrogen/ammonia to the world but also develop green hydrogen research centres and decarbonise industrial operations (e.g., Petrobras is studying using renewable hydrogen in refining operations) and its mass-transit sector (hydrogen fuel-cell buses), among other initiatives.

Chile

In Q2 2024, the Chilean government released an updated version of its Green Hydrogen Action Plan, 2023–30. Much like the country’s 2020 green hydrogen strategy, the updated action plan provides a pathway to the mass adoption of green hydrogen in the nation’s economy, which will help Chile reach its carbon neutrality goal by 2050.

The plan identifies 81 actions across 18 different categories in two phases. Phase 1 (2023–26) aims to achieve investment goals, the creation of necessary regulations and the growth of international partnerships. Phase 2 (2026–30) will build on Phase 1, with the goals of scaling up green hydrogen/ammonia production to begin decarbonising various sectors and regions of the Chilean economy.

60 – Active hydrogen projects in the region

Several notable action items include the creation of an emissions trading system (cap-and-trade system to boost the usage of green hydrogen in power generation), new tax incentives to attract hydrogen developers (e.g., tax breaks on imported equipment and technologies), a streamlined permitting process, $1b in government backing to help finance green hydrogen projects (with funding provided by international banks and Chile’s CORFO economic development agency), the allocation of state-owned lands to green hydrogen project developments and the creation of a green hydrogen certification programme, among other action items.

Chile’s abundance of renewable energy resources—particularly solar and wind—have attracted numerous green hydrogen project developers, especially in the Antofagasta and Magallanes regions. According to the GEI database, Chile is the leader in active hydrogen project market, representing nearly 35% of active projects in the region. At the time of publication, Chile had several multibillion-dollar projects under development. These include large-scale renewable energy and green hydrogen production facilities, such as the $11b hydrogen Magallanes project, the $8b Gente Grande project, the $3b HNH Energy green hydrogen/ammonia plant, the $2.9b Los Amigos del Verano project, Mejillones Ammonia Energy’s $2.5b Volta project, the 1.6GW HyEx project, the $1.5b AES Andes project, the $3b Atacama Hydrogen Hub project, the $5b HOASIS project, the $2b Llaquedona green hydrogen project, the more than $1.8b Vientos Magallanicos project, and various other green hydrogen/ammonia production and downstream use projects.

Although Brazil and Chile represent 60% of active hydrogen project market share in the region, several other countries have released low- and zero-carbon hydrogen strategies, along with accompanying capital projects and initiatives to promote hydrogen in their respective economies.

Other regional players

Argentina: According to Argentina’s National Strategy for the Development of the Hydrogen Economy, the nation is targeting at least 5mt/yr of low-carbon hydrogen production by 2050. Approximately 1mt/yr (20%) will be used domestically, with the rest exported to international hydrogen demand centres. To make this vision a reality, at least 30GW of electrolysis capacity and 55GW of renewable power generation must be installed. Argentina plans to develop five hydrogen production hubs (including infrastructure, hydrogen corridors, storage and fuelling) and adapt 2–5 ports to support hydrogen exports. These hydrogen development projects are expected to cost approximately $90b; therefore, the Argentinian government will have to explore various funding options from outside organisations, companies, international banks and government entities.
Mexico: Although the country does not have a formal hydrogen strategy, Mexico plans to increase domestic hydrogen production. The country already produces hydrogen as a byproduct from refining and petrochemicals operations (e.g., grey hydrogen); however, green hydrogen and derivative projects have been announced, as well. At the time of publication, more than $17b in green hydrogen investments have been publicly announced by either the Mexican government or the developing entity. These projects include green hydrogen for green methanol and/or green ammonia production, utilised in combined-cycle plants to decarbonise electricity generation, injected into the industrial sector to mitigate carbon emissions (e.g., steelmaking and cement), used as a fuel for hydrogen-powered vehicles, among other uses.
Panama: Due to its strategic location, Panama is trying to develop a regional hydrogen hub, especially for marine vessels that operate near or traverse the Panama Canal. According to the country’s hydrogen strategy, Panama plans to increase domestic green hydrogen production and/or its derivatives to 500,000t/yr by 2030, as well as target 5% of bunker fuel sales to be sourced from green hydrogen. By 2040, Panama is aiming to increase green hydrogen production and the percentage of bunker fuels sourced by green hydrogen and/or its derivatives to 2mt/yr and 30%, respectively. The country also plans to promote green hydrogen in its domestic heavy-duty transport vehicles and machinery sectors, reaching 20% within this timeframe and up to 30% by 2050—green hydrogen use in the country’s aviation sector is also forecast to reach 30% of total fuel demand by 2050.
Trinidad and Tobago: Released in November 2022, The Roadmap for a Green Hydrogen Economy in Trinidad & Tobago detailed the country’s plan to install 57GW of offshore wind capacity to produce 4mt/yr of green hydrogen. This green hydrogen is more than enough to decarbonise the country’s petrochemicals operations, with most destined for export. However, a significant amount of investment is needed in the country’s hydrogen value chain, including in renewable power, electrolyser installations and hydrogen infrastructure.
Uruguay: More than 90% of the country’s electricity generation is from renewable power; therefore, the use of green hydrogen will focus on decarbonising the domestic transportation and industrial sectors. The country’s hydrogen strategy seeks to add 1mt/yr of production by 2040. This will require 18GW of renewable power and 9GW of electrolyser capacity. Future potential uses of green hydrogen in Uruguay include the marine sector, fertiliser production (e.g., green ammonia), long-haul vehicle transport (hydrogen fuel-cell vehicle penetration is forecast to increase to 3% by 2030 and 35% by 2040) and as a feedstock to produce efuels. After 2030, Uruguay plans to scale up domestic renewables capacity to 18GW, and green hydrogen and derivatives production capacity to approximately 9GW. This scaleup could provide the nation with $1.9b/yr of additional government revenues. Early project development in Uruguay includes the Tambor Green Hydrogen Hub, the H24U project and the $4b Paysandu efuels project.
Peru: In mid-2024, the country’s energy minister announced that various companies have expressed a strong interest in building green hydrogen and derivative production facilities in the country, with a value totalling more than $12.5b. One company is Phelan Green Energy, which plans to invest more than $2b to build a 44,000t/yr green ammonia facility in the Arequipa region. If needed, the plant could be expanded to 1mt/yr.