Global South can become hub for low-cost e-fuels production – Trafigura

Global South countries are likely to produce e-fuels at more attractive levels than those produced in Europe, according to a new white paper from Trafigura.

PHOTO: Model of hydrogen energy storage. Getty Images

Trafigura expects that e-fuels can be produced in Global South countries at least two times cheaper than in Europe. If green hydrogen can be produced at $2/kg in Global South countries, the estimated cost of e-fuels produced with this green hydrogen as an input should be around $750/mt.

That compares to e-fuels production cost estimates of $1,200-1,500/mt in Europe, where high renewable electricity prices push up overall production costs. Green electrofuels, or e-fuels, are produced using captured CO2 combined with hydrogen produced with renewable electricity.

Global South countries such as Argentina, Brazil, Chile, Colombia, Egypt and India are endowed with some of the best potential for solar power and other renewable energy sources. That makes them well positioned to produce large volumes of green hydrogen, Trafigura asserts.

The white paper highlights that Latin America, sub-Sahara Africa, the Middle East and Oceania regions have potential to produce up to 3,852 exajoules (EJ) of green hydrogen, which is almost 100 times the amount required to decarbonise the shipping industry.

Trafigura expects global demand for bunker fuels to be around 290 million mt/year by 2030. It projects methanol bunker demand to reach at least 3-4 million mt/year by 2027 considering the current order book for methanol-fuelled vessels.

By Nithin Chandran

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