Panama is making plans to establish an inter-governmental organization that will facilitate the international trade of renewable hydrogen and its derivatives, according to Rosilena Lindo, the country’s undersecretary for energy.
The organization, named “Hydrogen International Trade Organisation,” is scheduled to be launched at the 28th United Nations Climate Change Conference (COP28) in December 2023. Panama has already held informal discussions with over 16 countries, and Lindo says “everyone is on board.”
The organization’s initial goal would be to ensure that everyone agrees on the same certification and standards for trading renewable hydrogen, a necessary step for ensuring consistency and access to clean fuel. According to Lindo, the inter-governmental organization will also seek to set ambitious targets and strategies for renewable hydrogen production, aiming to produce 500,000 tons per year by 2030, 2 million tons per year by 2040, and 4 million tons per year by 2050. The Panama Canal, which is a crucial shipping route, is expected to be a major use case for bunkering, with the strategy setting a target of 5% of all bunkering fuels used by 2030 being hydrogen or its derivatives.
The aviation industry is also expected to become a key consumer of hydrogen, with Tocumen International Airport in Panama City being the largest airport in Central America, offering flights to 70 destinations in 31 countries. The inter-governmental organization aims to introduce a 20% quota for renewable hydrogen products or sustainable aviation fuel by 2040. Furthermore, the consumption targets are to increase to 40% for the maritime sector and 30% for the aviation industry by 2050.
Panama plans to attract investors to its renewable hydrogen sector through various policy incentives, such as an exemption from import taxes on required equipment for renewable hydrogen production projects, among other infrastructure in the field. The country will also release a manual detailing available land for projects, required permits, and domestic companies that can support projects, among other information.
The Panama Canal could become a crucial transport route for international hydrogen trade in the coming decades, with at least one-third of all renewable hydrogen and derivatives traded globally passing through the canal by 2050, according to Lindo.
While Panama’s ambitious plans for renewable hydrogen trade are laudable, there are still significant gaps in existing certification schemes and standards, which could hamper the development of international trade. The success of Panama’s proposed inter-governmental organization for international trade of renewable hydrogen and its derivatives may depend on how well it can address these issues while promoting the adoption of clean fuel on a global scale.