Renewable hydrogen will be crucial for the global transition to climate neutrality as it is needed to decarbonise applications where direct electrification is not an option. Its trading potential as well as the social and economic benefits of a hydrogen economy make it attractive for countries with abundant renewable energy sources - such as Argentina. The South American country with its vast green energy potential is well-positioned to become a future exporter of renewable hydrogen and Power-to-X (PtX) products. A new paper from think tanks Agora Industry, Agora Energiewende and Fundación Torcuato di Tella assesses the role of hydrogen as a decarbonisation driver for Argentina and outlines priorities and next steps in building up a hydrogen economy in the context of Argentina’s national hydrogen strategy.
Diversifying the energy matrix with renewable energy will unlock Argentina’s hydrogen potential
With relatively consistent weather conditions and huge available swaths of land above all in the Patagonia region, Argentina’s renewable energy environment is optimal for scaling wind and solar power – including to be used to produce renewable hydrogen. While the country still relies heavily on fossil fuels for its energy sector, renewable energy is gaining ground. For example, the share of wind and solar in the power generation increased from less than 2 percent in 2015 to 14 percent in 2022. Diversifying the energy matrix with renewable energy will unlock Argentina’s hydrogen potential while reducing emissions in line with its climate commitments and mitigating energy costs.
Renewable hydrogen is secondary to direct electrification
While hydrogen use in Latin America is only around five percent of the total global demand, Argentina is one of the top consumers in the region. The country’s national hydrogen strategy, currently being drafted, should ensure that renewable hydrogen production is accompanied by the decarbonisation of domestic hydrogen demand. Furthermore, it should prioritise the use of hydrogen for applications where direct electrification is not possible such as certain industrial processes, shipping and aviation, and for providing flexibility to a renewable-based power system.
A key area to focus on in the strategy are the necessary improvements to the current energy infrastructure such as expanding high-voltage transmission capacity to be able to transport energy from renewable-rich regions such as Patagonia to demand centres like the Greater Buenos Aires area.
A hydrogen economy can help decarbonise industry and create socio-economic benefits
Developing a renewable hydrogen economy can help decarbonise Argentina’s industry and enable the production of green products with a high export demand potential such as ammonia, fertilisers, and synthetic fuels. Importantly, hydrogen projects should follow the most rigorous guidelines for sustainability and environmental protection. Scaling up the production of these products would stimulate sustainable industrial growth, help diversify the economy and create jobs. It could make Argentina a key supplier of renewable hydrogen and its derivatives to countries that will not be able to domestically meet their demand.
International cooperation could strengthen the Argentinian renewable hydrogen economy
As renewable hydrogen production in Argentina would make an important contribution to global emissions reduction efforts, it would also be in the interest of the international community to support the country’s development of a hydrogen economy, for example through bilateral hydrogen supply agreements. Regional cooperation would also strengthen Latin America's position as hydrogen producer in international fora on standards and trade.
The 49-page publication is available for free download below.