EM – According to the IEA, natural gas and CCUS offer the fastest route to low-carbon hydrogen in Latin America – Natural Gas Intelligence

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According to a new analysis by the International Energy Agency (IEA), natural gas and carbon capture, storage and use (CCUS) together offer the most feasible short-term path for expanding the low-carbon hydrogen production in Latin America.

Currently, the most widespread and economically viable method of producing hydrogen is by splitting off natural gas without reducing the resulting carbon dioxide (CO2) emissions.

Low-carbon hydrogen, on the other hand, can either by separating emissions from hydrogen from fossil fuels or by electrolysis to split water with low-carbon electricity from renewable energies or nuclear power.

“Coupling conventional technologies with [CCUS] is currently the main route to global production of low-carbon Hydrogen, “said researchers in the on Friday (August 12) published IEA report “Hydrogen in Latin America”. “This is likely to stay that way in the short to medium term as its production costs are lower than other low-carbon technologies.” Industrial facilities and infrastructure could use “.

The industrial and oil refining sectors of Latin America needed more than 4 million tons of hydrogen, or about 5% of global demand, in 2019, mainly for the production of ammonia, methanol, steel and refined oil products, researchers said / p> Hydrogen production in the region in 2019 required more natural gas than all of Chile’s gas supply and released more CO2 into the atmosphere than any road vehicle in Colombia, they added.

“Almost 90% of the region’s hydrogen needs per year 2019 focused on the region’s five largest economies as well as au f Trinidad and Tobago, which alone accounted for more than 40% of all hydrogen needs, ”researchers said.

The five largest economies include Argentina, Brazil, Chile, Colombia and Mexico. These countries “already produce large amounts of hydrogen from undiminished fossil fuels for use in the chemical and iron and steel industries as well as in oil refineries,” said the IEA team. “These countries are also home to the largest and most diversified industrial sectors in the region, as well as the most developed natural gas infrastructure and, in some cases, significant fossil fuel resources.

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“This gives these five countries the opportunity to explore a wider range of options for low-carbon hydrogen in both existing and new end-uses, leveraging existing industrial capabilities and value chains.”

In the case of Trinidad and Tobago, around half of the emissions come from the chemical industry, “which produces and uses large amounts of hydrogen from undiminished fossil fuels.”

The possibilities for producing low-carbon hydrogen from natural gas are mainly due to availability and limits the cost of suitable CO2 transport and storage facilities, the researchers said. “Despite these challenges, retrofitting large ammonia plants with CCUS could be a short-term opportunity to significantly increase low-carbon hydrogen production in the region while using the existing infrastructure for exporting low-carbon ammonia.” The IEA team said, that “low carbon hydrogen is attracting attention from policymakers in the region, largely due to Latin America’s long-term potential to produce and export large quantities of competitive low carbon hydrogen to other global markets”.

According to researchers, eleven countries in the region have either national hydrogen strategies and roadmaps are currently being published or developed, and a pipeline of more than 25 low-carbon hydrogen projects in the region is in the early stages of development.

This includes at least five large “gigawatt” projects, according to the IEA Generation of low-carbon hydrogen from renewable electricity, which “target export markets, not domestic demand”.

“To meet the region’s energy and climate goals, low-carbon hydrogen must replace the existing carbon-intensive hydrogen production in the region and in the meet the additional demand for new applications in the coming decades “, said the researchers.

They also found:” The conversion of existing natural gas transmission networks for handling pure hydrogen could be up to 85-90% cheaper than building new ones.

“In Latin America, some gas transport pipelines are currently underutilized and could be attractive for conversion in the long term, such as the transport pipelines between the extreme south and the far north of Chile and Argentina, two main areas for low-carbon hydrogen production. ”

In the longer term, i. H. By 2050, the researchers said, “Latin America has the potential to produce large amounts of low-cost hydrogen from renewable electricity thanks to its abundant, high-quality and often complementary renewable resources …” They added, “While many parts of the Region could achieve competitive prices in this time horizon, the lowest production costs could also be in southern Patagonia (Argentina and Chile) and in the Atacama region (Argentina, Bolivia, Chile and Peru) in northwest Mexico and northeast Brazil. “

Mexico gas price index

A technical upswing, fueled by lower wind generation, pushed natural gas futures higher earlier in the week. The September Nymex gas futures contract traded at $ 3.946 on Monday, up 8.5 cents from Friday’s close. October rose 8.5 cents to $ 3.960. Spot gas prices were mixed on Monday, with mostly mild weather across the country. However big …

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