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Argentina to Submit Bill Providing Incentives to Produce Hydrogen for Export

Argentina’s government plans to submit a bill for providing incentives to produce green and other forms of hydrogen to feed an expected rise in global demand in the transition to clean energy, Energy Secretary Flavia Royón has said.

“We see hydrogen as an opportunity for investment and growth,” she said late May 18 at the Global Forum on Green Hydrogen, which runs through May 19 in San Carlos de Bariloche, Argentina.

The bill calls for providing tax breaks, including 0.0% on revenue from green and pink (nuclear) hydrogen for the first decade after the legislation is approved. That tax will be 1.5% for blue (natural gas) hydrogen, increasing to 3% in the 11th year and then 4.5%, according to a draft of the bill.

Other incentives include access to foreign currencies — now restricted in Argentina — and the right to use up to 50% of the proceeds from hydrogen exports to pay the international financing and equipment costs for the projects.

Royón said the bill will be sent to Congress in the near term.

Rising demand

European markets are looking to buy supplies from Argentina and other countries in Latin America, Malcom Turnbull, president of the Switzerland-based Green Hydrogen Organisation, said in a video address at the event.

“Latin America can play a major role,” Turnbill said, citing the region’s ample hydro, wind and solar resources for making green hydrogen.

Turnbull added that he expects global demand for hydrogen to increase by some sevenfold by 2050, including for energy security as a replacement for fossil fuels to decarbonize heavy transport, shipping and steel.

“The European Union is looking to Latin America to supply it green hydrogen and ammonia to meet its own net-zero targets,” he said.

Companies are looking at Argentina and other potential suppliers to meet its rising demand for green hydrogen, including to make green steel.

“We need a hydrogen supplier in 2026,” Stefan Kaufmann, a hydrogen executive adviser to German steel producer Thyssenkrupp, said at the event. “We are looking all over the world for suppliers.”

He said the company will need an initial 150,000 mt/year of green hydrogen to produce 2.5 million mt/year of green steel in 2026 from one of its four furnaces, increasing that demand to 300,000 mt/year of green hydrogen in 2029. The company is currently producing 12 million mt/year of steel, he said, adding that the use of green hydrogen will help reduce its carbon dioxide emissions.

Kaufmann said he expects global green hydrogen demand to begin increasing substantially by 2030, adding that the bottlenecks for getting there include a lack of green hydrogen production capacity and the capacity to move the product to ammonia cracking plants.

Financing green hydrogen projects

Companies are considering projects in Argentina, including YPF, the country’s state-run energy company and biggest oil and natural gas producer.

YPF CEO Pablo Iuliano said the company plans to use the proceeds from oil exports to help finance its transition to clean energy in the long term, including with a revamped 115,000 b/d pipeline to Chile and a proposed construction a 380,000 b/d pipeline and port facilities on the Atlantic that will load very large crude carriers.

“Our first step is to quickly monetize oil to be able to finance future renewable energy projects” for making green hydrogen, Iuliano said.

Source : S&P Global