Argentina's IEASA to enter hydrogen, lithium sectors on demand growth expectations

Argentina's state-owned IEASA said it will enter the hydrogen and lithium businesses, building on its traditional role as the country's main natural gas importer, on the bet that demand for these products will grow in the transition to a carbon-neutral energy future.

The company will promote the production of hydrogen and lithium as well as its industrialization, it said in a statement late March 25.

"In the framework of a global energy transition, it is the key moment for the country to enter into this industrial process at scale," IEASA president Agustin Gerez said.

The move comes as the Argentinian government seeks to spur the use of electricity and hydrogen for running cars.

On March 22, Energy Secretary Dario Martinez submitted a bill to Congress for reducing biofuel blends in diesel and gasoline in part to promote the use of electricity, hydrogen and gas — as well as pure biodiesel and ethanol — as vehicular fuels. The government is also preparing a bill to provide incentives for the use and production of electric vehicles, helping to capitalize on the country's large lithium resources. Argentina is the fourth-biggest producer of lithium in the world and is one of the third largest for reserves, IEASA said.

The government has been working with the transport sector to test the use of electric buses, while the car makers Nissan and Renault have started selling EVs in the country.

Lagging in the region

Argentina's hydrogen production and use, however, have lagged compared with neighboring Chile and Uruguay, which are seeking to step up production for local consumption and export to Europe and Asia.

To try to pick up the pace, the technology arm of YPF, Argentina's state-backed oil company, last year formed a consortium of more than 30 companies including IEASA as well as the oil and gas producers and refiners Pampa Energia, Compania General de Combustibles and Trafigura to develop the local hydrogen sector with a view to produce and export supplies.

Despite the push to find cleaner sources of energy, the transition may take more time than some may hope, according to Miguel Galuccio, CEO of Vista Oil & Gas, the third-biggest oil producer in Argentina.

"We are in an energy transition, but the reality is that it will be long," he said in a March 22 interview with Buenos Aires newspaper Infobae. "Today we are a society that lives on fossil fuels, but we are transitioning towards something."

No matter how long it takes, Galuccio said that in the meantime, the key is to reduce the impact of fossil fuels during the transition.

Hydrogen's rising role

Even so, hydrogen may gain ground faster than expected against gas in the energy transition, Marta Jara, a former head of Shell in Mexico and of Uruguay's state energy company ANCAP, said at a March 17 energy outlook webinar hosted by the Institute of the Americas.

"Natural gas has been called the transition fuel for many years now," she said. "Now we are starting to see a new twist to that meaning ... with the incorporation of biogas and hydrogen. These might have a longer life and larger role to play in the transition to net-zero."

At the same event, Chris Mylde, senior vice president of corporate development at Sproule, a Canada-based energy consulting firm, said that while gas may be losing some of its "shine" as "the transition fuel of choice" compared with what was expected five to 10 years ago, "it still has a long runway."

He added that the use of carbon-capture and storage technology could extend to the use of gas by reducing its emissions.