Mexico’s Green Hydrogen Requires Renewable Energy Infrastructure

Mexico has great potential to build a green hydrogen economy, which would be a boon because it would create new job opportunities, reduce greenhouse gas emissions and help the country achieve its climate goals. However, experts believe that the country lacks proper infrastructure for the large-scale production of green hydrogen, particularly for renewable energy.

Green hydrogen has emerged as a versatile solution for decarbonizing various sectors of the economy, including transportation, buildings and industry, due to its potential to reduce greenhouse gas emissions and enhance energy security. Bernard Looney, Chief Executive, BP, has labeled hydrogen as the utility source that can decarbonize future businesses.

In Mexico, both PEMEX and CFE could become major players in the green hydrogen sector as they have the potential to drive the creation of an extensive green hydrogen market in the country, with an estimated value of US$1.2 billion per year by 2050. For instance, PEMEX would require more than 7.5GW of electrolysis capacity to produce over 650 kilotons of green hydrogen per year to meet the demand for green ammonia production, refining and synthetic fuel production. This would result in a green hydrogen supply worth US$800 million/y in 2050.

Similarly, CFE's largest opportunities for green hydrogen adoption lie in thermal power plants, which might power the equivalent of nearly 670MW of Combined Cycle Gas Turbines (CCGTs) with green hydrogen in 2050. This accounts for more than 87% of its hydrogen demand of 310 kilotons per year. To meet this demand, CFE would require an installed capacity of electrolysis of around 3.5 GW.

Israel Hurtado, President, AMH2, said Mexico could be a leader in green hydrogen production as well as an exporter. “Several studies point out that Mexico could save up to 64% in green hydrogen production costs compared to other countries because of our geographic location and renewable energy potential. Moreover, we could export it to Europe or Asia since we have access to the Pacific and Atlantic oceans and a free trade agreement with the US and Canada,” he said.

However, despite the country having a favorable geographical location, which gives it access to a wide variety of renewable energy sources to produce green hydrogen at a large scale, it lacks the proper infrastructure. The industry would require an investment of US$60 billion over the next 20 years, meaning US$3 billion per year to make this dream a reality. According to Hurtado, “Despite its great potential, it is too early to consider it an energy alternative. There is still a lot of infrastructure to develop,”

In today’s picture, 73% of power production still depends on fossil fuels. Wind and solar energy within the country have ceased to grow when compared to other technologies as only 6% of the mix is generated from wind and 4.8% from solar.