Uruguay, which has embarked on a second energy transition, is banking on green hydrogen to meet the demands of climate change. In line with the recommendations of the IPCC (Intergovernmental Panel on Climate Change), the country is aiming to achieve carbon neutrality by 2050.
The country had already completed the first stage of its energy transition, with an electricity mix made up of 97% renewable energies between 2017 and 2020. Uruguay is now embarking on an ambitious second phase. This involves developing a hydrogen economy and continuing to decarbonise key sectors of the economy.
Green hydrogen: Uruguay’s assets
Uruguay has a number of strengths that will enable it to become a major producer of green hydrogen. Thanks to an abundance of wind and solar resources, Uruguay could achieve competitive large-scale green hydrogen production costs by 2030 (between $1.2 and $1.4/kg). Besides, the country benefits from existing infrastructure, a largely renewable electricity mix, and easy access to water and CO2 (produced from sustainable biomass), which facilitates production of synthetic fuels at competitive costs.
This strategy could generate annual revenues of around $2.1 billion by 2040 for Uruguay. These revenues would mostly come from the export of synthetic fuels and hydrogen. The development of a hydrogen industry would create more than 35,000 direct, skilled jobs in various sectors. This new industry would strengthen the country’s energy independence while reducing its vulnerability to oil price fluctuations. A significant step towards Uruguay’s industrial, economic and social development, as highlighted in a report by Uruguay’s Ministry of Industry, Energy and Mines.
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Article written by Marina Leite and translated by Logan King