Green Hydrogen Has Potential to Drive New Industries in Mexico
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Green Hydrogen Has Potential to Drive New Industries in Mexico

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Karin Dilge By Karin Dilge | Journalist and Industry Analyst - Wed, 08/30/2023 - 13:43

Israel Hurtado, President, Mexican Association of Hydrogen and Sustainable Mobility (AMH2), has highlighted that green hydrogen has the potential to boost manufacturing operations in Mexico. These include automobile manufacturing, which utilizes hydrogen gas, as well as the production of turbines and electrolyzers, among other possibilities.

Hurtado emphasized that novel industries could emerge, such as electrolyzer, storage tanks, pipelines, hydrogen-powered electric turbines and compressor production, among other components. Previously Hurtado had said that several studies pointed out that Mexico could save up to 64% in green hydrogen production costs compared to other countries because of its geographic location and renewable energy potential. Moreover, the country could export it to Europe or Asia, since it has access to the Pacific and Atlantic oceans and a free trade agreement with the US and Canada. 

Green hydrogen has the potential to generate up to 3.2 million jobs in Mexico and attract up to US$60 billion in investments, according to AMH2. Additionally, it could prevent the emission of 53 million t of CO2 by 2050.

However, despite Mexico’s great potential to build a green hydrogen economy, fueling new job opportunities, reducing greenhouse gas emissions and helping the country to achieve its climate goals, experts believe that the country lacks proper infrastructure for large-scale green hydrogen production, particularly for renewable energy. TÜV Rheinland warns that Mexico is 15 years behind in the green hydrogen industry compared to countries like Germany and the US.

Hurtado believes that to propel this fuel forward, it is essential to stimulate the electric and hybrid vehicle market through incentives for consumers. In this regard, he proposed a 100% deduction in the purchase of electric vehicles for individuals and legal entities, as well as a zero VAT rate for these acquisitions. He also suggested the deduction of interest on credit purchases of these vehicles. Hurtado also considered that providing access to improved financing schemes through both public and private banking for the purchase of low-emission vehicles is necessary.

Antonio Caballero, President, H2V2 Mexico, believes that the country’s natural conditions provide high possibilities for it to become a global strategic hub for the production and export of green hydrogen. "Mexico has a unique combination of natural resources and technological capabilities that enable it to lead the green hydrogen revolution in Latin America," Caballero pointed out.

Caballero added that the challenge for the green hydrogen industry is in collaboration between the private sector, authorities and civil society, as it demands the implementation of public policies that foster investment and innovation in the sector. Other hurdles involve the overall development of this energy vector. Delays in the delivery of electrolyzers, which are experiencing increased demand and supply chain disruptions due to the pandemic, have resulted in an eight-month wait for equipment. Unfortunately, this delay also affects certification processes.

Green hydrogen production costs remain high, as well, compared to blue hydrogen (derived from natural gas) and brown hydrogen (derived from petroleum). However, the demand for green hydrogen in European markets makes it worthwhile to produce it.

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