Green hydrogen development has advanced significantly in Mexico, with new early-stage projects emerging regularly.
This week, President Andrés Manuel López Obrador said a new one, developed by Danish fund Copenhagen Infrastructure Partners, would add to the country’s portfolio.
BNamericas spoke with Israel Hurtado, the head of hydrogen and sustainable mobility association H2 México, about investment in this new industry and decarbonization in Mexico.
BNamericas: How will green hydrogen evolve in Mexico?
Hurtado: H2 México was created just over two years ago. In these two years, we have seen very good growth. Currently, we are almost 60 associated companies in the entire industrial value chain.
What we have done is, first, put the issue on the table. It was not fully publicly discussed in Mexico, unlike in other countries. The truth is that it is a nascent industry worldwide.
Second, we started meetings with federal and state authorities to see how we can promote the issue. And fnally, we developed a roadmap with PwC because Mexico does not have a national hydrogen strategy.
We deemed a roadmap necessary to help jumpstart the industry in an organized and efficient way. Therefore, last year we presented our roadmap. We are promoting projects and have held some forums with the lower house and the senate. We are working on particular issues. The association has working committees that address specific issues.
So, we are now focused on regulatory issues, technical standards issues, legislation issues, to develop the green hydrogen industry. That is what we are doing broadly.
BNamericas: When could production start?
Hurtado: Large and small projects are advancing. Starting with Pemex and CFE, Pemex replaced gray hydrogen with green hydrogen in its business plan for the next few years.
The energy ministry and CFE also included using green hydrogen in combined cycle plants for blending, combining it with natural gas, in the national electricity development progrm [Prodesen]. Both said 30% of this mix will be green hydrogen and 70% natural gas by 2036. It is an ambitious goal.
Private companies also have some projects. For example, a project in Campeche was recently announced involving 1.2bn euros (US$1.3bn). Another project covers green hydrogen production and electricity generation. And in Durango state, in the center of the country, another 1.2bn-euro project, for green ammonia and green hydrogen production for the fertilizer industry, is being set up.
Other electricity generation and storage projects exist, for example, in Baja California, which is not interconnected to the national grid but which has great solar potential. It has very viable conditions for the production of green hydrogen and even for export to the US.
Regarding mobility projects, we spoke to authorities to promote green hydrogen buses, which are already operating in other parts of the world. Some small-scale projects like industrial plants have solar panels and use naural gas and want to install electrolysers to produce green hydrogen and mix it with natural gas and start decarbonizing their operations. We are talking about small mix levels. But we see growing interest in this segment.
Some companies are in the prospecting stage for electrolysers. It is likely that small-scale green hydrogen production starts at these plants by the end of the year.
BNamericas: How has the dialogue with the authorities progressed? How is Mexico doing compared to other countries?
Hurtado: This question can be approached from several angles. First, Mexico does not have a national hydrogen strategy. In that sense, we are a little behind other countries. In Latin America, Chile, Peru, Uruguay, Colombia and Costa Rica have national hydrogen strategies.
In the case of our neighbors and trading partners in North America, both the US and Canada have national hydrogen strategies. In fact, the US is much more ambitious, since its Inflation Reduction Act established subsides and incentives for solar generation, electromobility and green hydrogen. In Europe, there is also great progress in this regard. To address this point, we made our own roadmap.
The fact that Pemex and CFE have green hydrogen projects seems very positive. These companies are part of the State structure, and are already considering this segment.
Finally, the economy ministry will publish a hydrogen document, hopefully in September. That makes us very happy. Let’s see what the range is. But it would be the first document presented by a ministry on the subject in Mexico.
We talked in several forums during the meetings in the lower house and the senate. Not everything that needs to be done is up to these bodies. But it is important that lawmakers are informed and know what needs to be done.
Lastly, state authorities have been heavily involved. States like Tamaulipas, Puebla and Nuevo León have roadmaps or are working on them. And we have spoken with agencies, commissions and energy custers in various states. So, the issue is being promoted strongly in the states, regardless of what is done at the federal level.
BNamericas: And what is happening at the regulatory level? What’s needed to adapt to green hydrogen?
Hurtado: I think we don’t need significantly more regulation than what exists. As hydrogen is being produced and consumed in Mexico, regulation on the matter already exists. Much of this regulation is approved with the US under the USMCA trade agreement.
New to green hydrogen are electrolysers, storage and transport. We believe we need to adapt or create technical standards for these segments. It is a normalization process, not so much permitting or regulation at a larger level. We must adapt what already exists for this new industry.
BNamericas: The energy policy of this administration has discouraged private companies from generating energy. Could this tension clash with the development of green hydrogen?
Hurtado: Rather, I think hydrogen is complemetary to that vision. This administration has been very concerned about variable energies and the stress they place on the electrical grid. The production and consumption of hydrogen in Mexico can contribute to solving this issue.
To produce green hydrogen at renewable plants and use that hydrogen for mobility or industrial decarbonization or blending, you would not have to use the national grid. The electricity generated by that hydrogen would not stress the system.
If you produce green hydrogen for industrial processes, no impact on any part of the national energy system should be felt. Rather, we believe it will help Mexico to gain energy sufficiency and security. Mexico generates around 60% of its electricity with natural gas and of that 60%, most is imported, which subjects the country to international gas price variations and puts access to gas at risk, which is a problem, as we see regarding Russian gas in Europe, for example.
Fortunately, Mexico has access to gas and at a cometitive price, but at the end of the day it is imported. So Mexico could produce hydrogen to start displacing a quantity of natural gas. At the same time, this makes it possible to start decarbonizing natural gas electricity generation. So, I believe that hydrogen can contribute to Mexico’s energy matrix and to its energy security.
