He asserts that Bolivia has the potential to achieve one of the most cost-effective Levelized Costs of Hydrogen (LCOH) in the world, adding that historical production data from formation water in oil fields shows an average annual production of 7,206,194 barrels.
ISSUE 137 | 2024
Vesna Marinkovic U.
1Why is Bolivia, a traditionally hydrocarbon-producing country, now interested in hydrogen?
Bolivia has a growing interest in green hydrogen production due to its abundance of natural resources. The country has significant water resources and renewable energy potential (such as solar and wind), which are essential for producing green hydrogen.
Additionally, Bolivia seeks to diversify its energy matrix and position itself in the international clean energy market. This shift aligns with the global energy transition toward more sustainable sources, which began with the Paris Agreement (COP21) in 2015, of which Bolivia is a signatory. Green hydrogen production could also serve as a strategy to revitalize the national economy by creating jobs and reducing carbon emissions, adhering to international commitments.
2Is oil still irreplaceable in Bolivia?
In the short term, oil remains irreplaceable due to the economic gap that makes it challenging for clean energy to compete with hydrocarbons, especially when hydrocarbons are subsidized. However, technological advances in hydrogen and renewable energy are closing this gap by reducing implementation costs. In this context, hydrogen is emerging as an attractive medium-term alternative, with projections suggesting that hydrogen production costs could eventually compete with fossil fuels.
3Why is hydrogen so relevant today?
Green hydrogen is often called the “fuel of the future” because of its potential to help decarbonize the planet, particularly in sectors that are difficult to electrify, such as heavy industry, transportation, and aviation. Its key feature is its role as an energy carrier, efficiently storing renewable and intermittent energy.
Moreover, in the global fight against climate change, with efforts to limit global warming to 1.5 or 2 degrees Celsius, green hydrogen and low-carbon hydrogen are emerging as critical solutions for transitioning to a carbon-neutral economy by 2050.
“In regions like the Altiplano, solar irradiation is exceptional—the best in the world—while in the eastern regions, wind resources and significant hydropower potential can be harnessed.”
4Why isn’t hydrogen widely used as a fuel yet?
Despite its potential, hydrogen still faces challenges that have limited its widespread use. Green hydrogen production requires advanced technologies like electrolysis, which remain expensive compared to fossil fuels. Additionally, hydrogen infrastructure for production, transport, and storage is still underdeveloped. There is also a need for specific regulatory frameworks to promote and govern its large-scale use.
5Is it viable to produce green hydrogen in Bolivia?
Yes, it is estimated that global hydrogen demand, currently at 90 million tons annually, will exceed 600 million tons by 2050. This represents a significant market opportunity for Bolivia. The country has enormous potential for producing green hydrogen thanks to its abundant renewable resources and existing infrastructure in both hydrocarbons and electricity. In regions like the Altiplano, solar irradiation is exceptional—among the best in the world—while the eastern regions offer wind resources and significant hydropower potential.
Given these conditions, Bolivia can achieve one of the most competitive Levelized Costs of Hydrogen (LCOH) globally. However, the viability of this industry will depend on investments in infrastructure to scale production, training technical personnel, and developing public policies that promote its implementation.
6Which regions in Bolivia have the greatest potential for hydrogen production?
Both the Altiplano (due to its exceptional solar irradiation) and the eastern region have strong potential for hydrogen production. Our proposal has identified four strategic zones for plant deployment, based on factors such as proximity to oil fields, potential industrial users, renewable energy resources, connection to the National Interconnected System (SIN), and the availability of existing oil infrastructure.
• Bulo Bulo: Near the Ammonia and Urea Plant (PAU) for green ammonia production. Additionally, the Entre Ríos thermoelectric plant, located about 15 km away, could partially replace natural gas with hydrogen.
• Warnes: The Colpa Gas Plant offers oil infrastructure suitable for hydrogen production. The area also features an existing wind farm, the Warnes Thermoelectric Plant, the Warnes Cement Plant, and PILAT, making it a potential hub for industrial development.
• Río Grande: This region has water resources and substantial wind capacity. Hydrogen production here, combined with CO2 capture, could enable the creation of synthetic fuels. Beyond hydrogen production, this area has the potential to become a major energy hub in South America.
• Villamontes: Home to mega gas fields and oil fields with high water production. Hydrogen could replace natural gas in the Villamontes thermoelectric plant and be used to produce synthetic fuels.
7What role does water from oil fields play in this project?
Formation water, a byproduct of hydrocarbon extraction, can be used to generate hydrogen through electrolysis. Currently, this water is extracted and sent to treatment plants for reinjection into other reservoirs without adding value.
In Bolivia, historical data shows that formation water production averages 7,206,194 barrels annually (around 20,000 barrels per day). This volume could be used to produce green hydrogen, reactivate inactive wells, and recover remaining hydrocarbons.
8How would such projects be financed?
The initial investment for each hydrogen plant is estimated at $400 million, with equipment manufacturing timelines ranging from 12 to 18 months. Green hydrogen projects could be financed by international organizations such as the World Bank, the Inter-American Development Bank, and the Green Climate Fund, all of which support sustainable projects.
Additionally, public-private partnerships could combine resources from both sectors to optimize costs and benefits. Subsidies and tax incentives could also encourage investment in this sector, enabling Bolivia to compete with countries like Chile, Colombia, and Brazil, which are already advancing their green hydrogen industries.
9Do current regulations facilitate hydrogen production in Bolivia?
While Bolivia recently published its National Roadmap and Strategy for Green and Low-Emission Hydrogen Production and Use, there is still much work to be done. A specific regulatory framework, including laws and regulations for production, distribution, storage, and commercialization, is still needed, along with incentives to attract investments and ensure legal security.
Draft laws have already been presented and are awaiting review and approval by the Plurinational Legislative Assembly. Hopefully, this legislation will be addressed and enacted in the coming months.
10Is it possible to replace natural gas with hydrogen in plants like Bulo Bulo?
Yes, hydrogen can replace natural gas in industrial processes and electricity generation. At the Bulo Bulo Plant, natural gas is currently used to produce hydrogen, which is then combined with nitrogen to produce ammonia. Our proposal suggests partially replacing this gray hydrogen (produced from natural gas) with green hydrogen, thereby reducing CO2 emissions and freeing up natural gas for export.
Our projects are strategically located in areas with significant production of formation water, which can be used to generate hydrogen. This hydrogen could replace a portion of the natural gas consumption in Bolivia’s main thermoelectric plants. Such a transition would not only increase national revenue by freeing natural gas for export but also prepare Bolivia for the global energy transition.
