Mexico's Role in Green Hydrogen: Opportunities and Challenges

During the Clean Hydrogen Forum held in Mexico City, international actors, including the Japan Bank for International Cooperation (JBIC) and European companies such as DH2 Energy and HDF Energy, acknowledged Mexico's essential role in green hydrogen (H2V) production aimed at energy transition. Yuki Nakano, Chief Representative, JBIC Mexico, assured that Mexico will continue to receive financial support from the bank, as the new government led by elected President Claudia Sheinbaum will focus on decarbonization. 

Japan, the second-largest economy in the Asia-Pacific region after China, is making significant investments in energy transition. This issue is a priority for Prime Minister Fumio Kishida, whose agenda includes initiatives to support ecological transition as Japan aims to shift its national industries towards innovation, explained Ortis Fan, ESG Analyst, Bloomberg Intelligence. Nakano explained that JBIC currently has 45 projects with a loan of US$1.3 billion in progress and encouraged further financing of decarbonization-focused projects like H2V.

Japan's 2030 ecological plan aims to reduce emissions by 46% from a 2014 baseline and mobilize US$1 trillion to combat climate change. This includes over US$130 billion in green bonds and US$65 billion for new green startups. Additionally, seven pension funds managing US$600 billion in assets will join the Principles for Responsible Investment to promote ESG investment, as reported by Bloomberg.

European companies such as Spain's DH2 Energy and France's HDF Energy, global pioneers in H2V production, are advancing energy investment projects in Mexico, reaffirming the country's priority role in this sector. According to the Mexican Hydrogen Association (AMH2), as an optimal region for renewable production, Mexico could have up to 64% lower production costs compared to other countries with less energy potential by 2030.

Pierre-Yves Gary, Director of Development for Latin America, Dhamma Energy, the entity behind DH2 Energy, highlighted that the company has five H2V projects in Mexico. The most advanced is located in Sinaloa, with a 1,600ha facility combining a solar power plant to produce clean energy and an electrolyzer unit. “The solar power of this facility is 946MWp and is paired with 737MW electrolyzers to produce 42,500t of H2V per year,” Gary emphasized.

Ana Sofía Esquivel, Project Manager for Latin America at HDF Energy, presented progress on one of the company's seven projects in Mexico, named Energia Los Cabos (ELC), located in Baja California Sur. Esquivel stated that ELC aims to strengthen the electrical grid by injecting stable and constant solar energy year-round. “These facilities combine clean energy generation, whether solar or wind, with a battery storage system and its hydrogen chain, which is the long-term storage part,” Esquivel explained.

José Luis Sánchez, Analyst, ERM, noted that despite its great potential, the clean hydrogen industry still faces several challenges. He stressed that both in Mexico and internationally, there is a lack of a roadmap, regulatory framework, and incentives for investment and technology. “There is still much to be done in technology for hydrogen production, distribution, storage, and training; new technologies will need to be taught in the country,” Sánchez detailed.

However, the large-scale entry of this industry could generate significant economic opportunities, Sánchez highlighted. According to AMH2 figures, the H2V sector could attract investments of up to US$60 billion by 2050 and create around three million local jobs. In this regard, Israel Hurtado, President, AMH2, underscored that collaboration is crucial. “AMH2 has promoted the creation of the Mexican Hydrogen Center to involve more companies and, above all, individuals and research institutes from both national and international locations,” he said.

In the global decarbonization landscape, clean hydrogen has become a crucial element for energy transition. By 2050, demand for this fuel is expected to grow fivefold, according to UNDP reports. The World Economic Forum, noted that Latin American countries are uniquely positioned to leverage their vast renewable energy resources for clean hydrogen production. However, current challenges such as the lack of demand in domestic and export markets, insufficient clean hydrogen infrastructure, and technology adaptation must be addressed. This requires close collaboration between public and private actors at all levels to realize the region's potential.