Latin America and the Caribbean (LAC) is prepared to play a pivotal role in the global energy transition through the adoption of green hydrogen (GH2). With an abundance of renewable energy resources, the region has the potential to become a leader in GH2 production and utilization. The Inter-American Development Bank Group (IDBG), which includes the IDB, IDB Lab, and IDB Invest, recognizes the significance of this opportunity and has developed several GH2 studies, roadmaps, and strategies financing for projects in the region.
Based on our years of experience, the IDB has compiled the information and knowledge we have gathered from research and project financing in relation to GH2 and its derivates in Latin America
and the Caribbean (green ammonia and green methanol) in one publication entitled “Unlocking Green and Just Hydrogen in Latin America and the Caribbean”. The report provides comprehensive insights into the technical, supply, demand, regulatory, and financial aspects of GH2 development in the region, as well as outlines the IDB’s support in the inclusion of GH2 within the sustainable energy transition.
Unlocking the Technical Potential of Green Hydrogen: Key Takeaways
- GH2, produced through electrolysis powered by renewable energy sources, offers a clean and versatile alternative to traditional fossil fuels: LAC boasts abundant solar, wind, and hydropower resources, making it an ideal candidate for large-scale GH2 production. The IDBG is actively engaged in pilot projects, feasibility studies, and the development of the enabling framework for investment to flow, including the development of certification and safety standards to address the technical challenges associated with GH2 adoption. These efforts aim to ensure the efficient production, storage, and distribution of GH2, enabling its integration into existing energy systems.
- Robust policy and regulatory frameworks are crucial to facilitate the widespread adoption of GH2 as a competitive alternative for decarbonization processes: The IDB, in collaboration with LAC governments, actively supports the development of national GH2 strategies that provide a clear roadmap for investment and innovation, as well as the design and implementation of the first hydrogen projects. These strategies encompass a favorable investment climate, long-term planning, and harmonized certification systems to ensure the quality and safety of GH2 production. By creating an enabling environment, the IDB aims to attract private sector investments and drive the growth of the GH2 industry in the region.
- The establishment of a sustainable GH2 market requires significant investments in infrastructure: The IDB recognizes the need for innovative funding mechanisms and is working to mobilize public and private sector investments in GH2 projects. This includes the development of hydrogen production facilities, storage systems, and transportation networks. By leveraging its expertise and partnerships, the IDBG aims to catalyze infrastructure development and create economic opportunities while advancing the region’s energy transition.
Unlocking economic opportunities…
The adoption of GH2 in LAC not only contributes to environmental sustainability but also unlocks economic opportunities. The region’s competitive advantage in low-cost renewable energy production positions it as a global GH2 exporter. By capitalizing on this advantage, the region can stimulate economic growth, enhance energy security, and create high-quality jobs in the GH2 sector. The IDBG is actively fostering public-private partnerships, facilitating access to finance, and promoting capacity building to unlock these economic opportunities and drive sustainable development in the region.
…And Just Hydrogen Production
As LAC embarks on the GH2 revolution, the IDBG emphasizes the importance of a just and inclusive energy transition. The IDBG engages with local communities, indigenous peoples, and other stakeholders to ensure their meaningful participation in GH2 projects and to address potential socio-economic and environmental impacts. By integrating social, environmental, and economic considerations, the IDBG aims to create a sustainable GH2 market that benefits all segments of society. Furthermore, it promotes the responsible use of natural resources. In this line, IDBG encourages the use of seawater desalination or reuse of wastewater as an input for the generation of H2 from electrolysis.
The IDB is supporting the development of GH2 infrastructure, fostering policy frameworks, and unlocking economic opportunities in the region. By embracing a just and inclusive approach, LAC can lead the global transition to a greener and more sustainable future. The IDB, in partnership with governments, industry, and communities, is playing a pivotal role in shaping this transformation and paving the way for a prosperous GH2 industry in LAC.
To delve deeper into the IDBG’s vision and initiatives for GH2 development in LAC, we encourage you to explore the publication titled “Unlocking Green and Just Hydrogen in Latin America and the Caribbean” published by the IDBG in collaboration with external authors from prestigious consulting firms actively working in GH2.
Blended Financing for Early Adopters
Additional to the specific GH-2-oriented support the IDBG provides, it also facilitates financing GH2 solutions through blended-finance mechanisms. This road started in 2022 with the approval of the Green Climate Fund’s sustainable mobility facility, which includes a US$50 million component of grant resources to deploy vehicles to grid and hydrogen solutions in the transport sector.
which includes financing up