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Spanish green hydrogen competition gaining traction as African and Latin American countries develop green hydrogen.

image credit: Global hydrogen production by fuel and hydrogen demand by sector 2019-2070 Under the Sustainable Development Scenario (Source IEA, Energy Technology Perspectives, 2020)
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Germán José Manuel Toro Ghio, son of Germán Alfonso and Jenny Isabel Cristina, became a citizen of planet Earth in the cold dawn of Sunday, May 11, 1958, in Santiago, capital of southern Chile....

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  • May 30, 2023

The EU's effort to achieve independence from oil presents opportunities and challenges in both regions.


“Latin America and the Caribbean region has an enormous amount of renewable resources such as wind, solar, geothermal, and hydrological resources, which allows the region to have 55% of clean power generation compared with the global average of 35%. Yet, that renewable energy was developed for the electricity market. What would happen if more renewable energy projects were built with the objective of producing green hydrogen for domestic needs and exports in the format of ammonia or methanol?  The current and future renewable energy resources could be directed to the production of green hydrogen and provide a strong position for the region in this new worldwide industrial value chain that starts to develop. Hydrogen is also a great opportunity for Latin America and the Caribbean countries to achieve cleaner domestic energy matrices, particularly for that 17% of emissions originating in industrial activities.


Europe's confidence in the promised energy and industrial revolution generated by hydrogen is facing a new crisis. Not only are projects progressing slowly, with less than 5% implementation, but other regions are also looking to join the race at an accelerated pace. According to estimates by Goldman Sachs, the countries in Africa, Latin America, and the Middle East have significant potential for exporting this energy source. By 2050, it is expected to account for 15% of all energy sources in Europe. In addition to aiming to produce one-fifth of Europe's hydrogen by 2030, Spain also strive to become a central hub for hydrogen entry into the region. The Iberian Peninsula not only accounts for 20% of the world's renewable hydrogen projects but also has the potential to become a crucial production route for energy powers like Morocco, Algeria, Brazil, and Chile. Unlike oil, hydrogen is the most abundant element in the universe, which means it can be produced anywhere on the planet. However, the cost and competitiveness of it vary, influenced by the energy price required to produce it. A report by the Hydrogen Council, a consortium of energy and oil industry leaders, identifies Latin America and Africa as the new promising regions for hydrogen development. Javier Brey, the President of the Spanish Hydrogen Association (AEH2), opposes the notion of hydrogen being a threat to local production and instead prefers to view it as an opportunity.

"Although the two terms always go hand in hand," he explained in conversation with CincoDías.

And he acknowledges that there is a race with regions at different starting points, but he also recognizes that "not everything has been said.

“The RepowerEU strategy envisions that by 2050, the European Union will import 10 million tons of green hydrogen, which is half of the estimated consumption. This percentage represents a significant decrease in Europe's dependence on oil imports. In 2021, Europe imported nearly 92% of the oil it consumed. At the same time, the EU-27 faces the challenge of avoiding the same mistake of entrusting practically all of their supply to a single supplier, as they have previously done with Russia.

The good news for major energy consumers like Germany, the Netherlands, and France is that the transportation costs for this energy source are minimal. A joint study conducted by the Port of Rotterdam, the largest terminal in Europe, and Uruguay has affirmed that the transport costs for hydrogen production from South America are marginal, despite the vast distances that separate the two countries. Near Neighbors North Africa is already positioned as the leading potential supplier of green hydrogen to Europe, with a projected production of up to 597 million tones annually by 2050. The vast stretches of uninhabited land, coupled with the high intensity of local radiation and the potential for energy connections with Europe that could be reconverted, have increased interest in the region.

“Morocco’s ambition to become a green hydrogen exporter could be complemented by Algeria's urgent need to replace its hydrocarbon exports, as well as the presence of gas pipelines," as stated in a recent study conducted by the Royal Elcano Institute.

This has not gone unnoticed by Brussels. In November of last year, the EU selected Morocco to establish its first green partnership with a country. This alliance includes the development of local hydrogen production capabilities. In October of the same year, a similar agreement was signed with Algeria. Bilaterally, the Alawite kingdom has signed agreements with Portugal, Germany, and Spain. The benefits for the country are clear. The high cost of the projects, coupled with the lack of local technology and capacity, present good opportunities for Spanish companies. Moreover, the interconnections that directly link the Iberian Peninsula to Morocco and Algeria could be utilized for shipping this element.

The risk is that other projects that avoid local geography will be favoured, such as the southern corridor linking Algiers directly to Italy and from there to the rest of Europe. In January, the two countries signed an initial agreement to begin technical studies before constructing this infrastructure. This initiative competes with the H2MED initiative promoted by Spain, Portugal and France, which Madrid and Paris are still debating.

Latin America

The real production giant may be on the other side of the Atlantic, in a region where Spanish companies have more than 150 billion euros in investments. Latin American countries could produce up to 913 million tonnes of hydrogen at a low cost by 2050, making it the region with the most significant potential in the world. At the same time, its geographical position connects it to both Asia and Europe.

Chile and Brazil lead the continental race, with almost thirty projects under study each. Argentina, a little further behind, has one of the world's largest initiatives worth 8 billion dollars (7.457 billion euros at current exchange rates). By way of reference, the largest investment announced in Spain, that of the oil company Cepsa in Andalusia, is less than half that.

"When Latin America looks to Europe, the entry point is the Iberian peninsula," Brey says. "What we can't do is sit here in Europe and wait for them to make their investments in renewables, infrastructure, ports and other key components. It's just not going to work," he says with conviction.

Many of these projects, especially in renewable generation, are already underway. In 2019, the latest data available, Brazil, Mexico, and Chile were among the 20 countries in the world with the highest investment in this sector, and Spanish companies have actively participated in this phenomenon. For example, Iberdrola inaugurated a hybrid project in Brazil in March for more than 630 million euros.

The potential is confident. The International Energy Agency points out that, despite the high level of decarbonisation of the energy matrix in most Latin American countries, the region needs to rethink the entire value chain to take advantage of the hydrogen opportunity. This implies modernising its transmission lines, generating new transport infrastructure and port terminals. At the same time, 17 million people in the region lack access to electricity, a social debt that the region must address.

Germán & Co

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