The Uruguayan government signed this Tuesday (18), in Brussels, during the summit between the European Union (EU) and the Community of Latin American and Caribbean States (Celac), a memorandum of understanding with the EU on renewable energy and green hydrogen.
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“Both Europe and Uruguay want to be carbon neutral by 2050. Today’s energy agreement will help us get there, together. It will also support the development of green hydrogen, a strategic industry for Uruguay's future,” tweeted European Commission President Ursula von der Leyen.
The memorandum highlights that investments in this sector “must comply with environmental legislation” and “take into due consideration” the protection of water systems, according to a statement from the EU.
Uruguayan President Luis Lacalle Pou announced last month that Uruguay will receive the largest investment in its history, around US$4 billion (R$19,2 billion), from a multinational based in the United States, HIF Global , to produce green hydrogen-based synthetic fuels destined for Europe.
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“In the hydrogen economy, which is emerging around the world, Uruguay can play a leading role, as it can generate renewable energy on a scale much greater than its own demand”, explained the Uruguayan Minister of Industry and Energy, Omar Paganini, to AFP.
In 2022, 91% of the country's electricity generation came from renewable sources: 39% hydroelectric, 32% wind, 17% biomass and 3% solar. The share of fossil sources in the total energy supply was only 44%, well below the world average.
'Exporting sun and wind'
“The energy transition in Uruguay began years ago,” Alejandro Stipanicic, president of state fuel company Ancap, told AFP. “That’s why we say we want to export sun and wind, instead of importing fossil fuels.”
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Green hydrogen is obtained through the electrolysis of water from renewable energy.
Uruguay also has abundant biogenic CO2 which, combined with green hydrogen, allows the production of “e-fuels”, synthetic fuels.
This is what Ancap offered investors: taking advantage of biogenic CO2 from its ethanol plant in Paysandú, located 400 km northwest of Montevideo.
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HIF Global won the bid and, in December, began producing synthetic fuels in Chile from CO2 captured from the atmosphere.
“Synthetic fuel is chemically equivalent to that derived from petroleum. This has a great advantage, which is that there is no need to change the infrastructure”, explained Martín Bremermann, representative of HIF Global, to AFP.
Among the shareholders of HIF Global is the German automaker Porsche.
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Paganini estimates that HIF Global production in Uruguay will begin in 2027.
Water threatened?
The Uruguayan government predicts that, by 2040, the green hydrogen sector and its derivatives will represent annual revenue of US$2,1 billion (R$10 billion), 2% of the projected GDP.
In addition to the HIF Global plant in Paysandú, there are two other green hydrogen initiatives in the north of the country: a pilotthe one in Paso de los Toros, associated with the cellulose plant of the Finnish company UPM, and a project in Tambores, by the German company Enertrag and the Uruguayan SEG Ingeniería.
However, some fear this new industry will deplete a crucial resource: water.
In February, residents of Tambores filed an appeal with the Supreme Court of Justice, alleging that water “extractivism” is being promoted.
Uruguay is one of the few countries that enshrines access to water as a human right in its Constitution.
Paganini ruled out the risk of water shortages at a time of particular sensitivity in the country, which is facing a historic drought that has affected the supply of drinking water to the capital Montevideo.
In the case of Paysandú, the largest project, “around 1.200 m³ per day will be used from the Uruguay River, which has a flow around 500 times greater”, he assured.
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