Panama plans international hydrogen organisation

Panama is planning to set up an intergovernmental organisation to facilitate international trade of renewable hydrogen and its derivatives, the country's undersecretary for energy Rosilena Lindo has told Argus.

The country hopes to officially launch its plans for the body — that is to be called "Hydrogen International Trade Organisation" — at this year's Cop 28 climate talks in December.

It has so far spoken informally with "more than 16 countries" regarding the plans and "everybody is on board", Lindo said.

Panama hopes to get at least 10 countries to ratify and approve a treaty setting out the organisation's ambitions within one year of the launch in December. It will then also seek to jointly decide with participating states on a headquarter and first director for the organisation, according to Lindo.

An initial goal for the body would be to "bring everyone on the same page when talking about certification and standards", Lindo said. "This will be key to ensuring that we are trading the same or similar type of fuel", she said.

"We want to discuss how we are going to ensure that everybody has access to this clean fuel", Lindo said.

Several national governments and other organisations are in the process of developing hydrogen certification schemes and standards that they hope will find international recognition. But progress in the field has been limited so far. Renewable energy agency Irena said earlier this year that there are still "significant gaps" in the existing attempts at certification schemes which could hamper the development of international trade

Strategy and targets

Panama will launch its national green hydrogen strategy on 28 April, building on an initial roadmap released in January last year.

The strategy will set specific goals for renewable hydrogen production in Panama — namely 500,000t/yr by 2030, 2mn t/yr by 2040 and 4mn t/yr by 2050.

It will also set specific targets for renewable hydrogen use across various sectors. The Panama Canal's status as a key shipping route means that bunkering will be a major use case, Lindo said. The strategy will set a target of 5pc of all bunkering fuels used by 2030 being hydrogen or its derivatives. This alone could equate to 800,000t/yr of hydrogen demand, meaning that Panama will also need to import substantial volumes to supplement its domestic production.

The share of renewable hydrogen and derivatives in bunkering is to grow to 30pc in 2040. By then, a 20pc quota for renewable hydrogen products or sustainable aviation fuel should also be introduced, according to the strategy. The aviation sector could become a key hydrogen consumer in the country, given that the Tocumen International Airport in Panama City is the largest in Central America, offering flights to 70 destinations in 31 countries.

The consumption targets are to be increased to 40pc for the maritime sector and 30pc for the aviation industry by 2050, Lindo said.

Panama will have to rely on imports to achieve these quotas in the coming decades and hopes to attract supply from various regions, especially South America which has large potential for ample low-cost renewable hydrogen, Lindo said.

The Panama Canal could, meanwhile, become a key transport route for international hydrogen trade in the coming decades. At least one-third of all renewable hydrogen and derivatives traded globally could be transported through the canal by 2050, Lindo said.

Policy incentives

Panama's government is planning to attract investors to the country's renewable hydrogen sectors through various measures.

This includes an exemption from import taxes on equipment required for setting up projects for renewable hydrogen production and other infrastructure in the field, Lindo said.

The country also plans to later this year release a manual for anyone interested in investing in the country's renewable hydrogen sector. This is to detail land available for projects, required permits and domestic companies that can support projects, among other information, Lindo said.

Several firms have expressed interest in setting up renewable hydrogen production projects in Panama, Lindo said. Among them is SGP Bioenergy which is developing a biorefinery with the Panamanian government that is expected to produce up to 180,000 b/d of biofuels and 405,000 t/yr of renewable hydrogen when fully operational.

By Stefan Krümpelmann