Costa Rica: 25 million Euro green hydrogen project approved

What began as an application to a funding competition ended with the approval of an ambitious project for an amount of € 25 000 000, which will allow Costa Rica to invest in the development of green hydrogen as a complementary alternative to the decarbonization of its economy.

This was recently announced by the Mitigation Action Facility (MAF) to Costa Rica’s Vice Minister of Energy, Ronny Rodriguez:

“For us it is extremely important to start generating knowledge through projects where we have financial support in the initial stage, so that once the project is developed, the information is open so that we can see what investment is needed, what are the benefits to the environment, what are the social and economic benefits, and from there generate what we call a hydrogen ecosystem.

The Green Hydrogen for a Decarbonized Economy project in Costa Rica aims to use this clean energy as an alternative for sectors that cannot be easily electrified, such as the cement industry and heavy-duty transportation.

“The project has two major components. On the one hand, financial assistance to support initial investments in green hydrogen projects through concessional loans and subsidies, which are necessary because it is a new segment of the economy with high initial costs. On the other hand, technical assistance to develop human and institutional capacities, adjust the legal and regulatory framework as necessary, formulate strategies to generate positive social impacts such as employment generation, etc. In general, we want to support the Costa Rican government in the implementation of the National Green Hydrogen Strategy”, commented Claus Kruse, interim project director of the German Cooperation GIZ.

“This is a unique model, it means that Costa Rica has a great support and it becomes an opportunity to build capacity of the private sector, public sector together with the State’s stewardship to be able to venture into a new energy. We need to de-accumulate carbon in the atmosphere and this is one of the forms of energy that has all the potential for the future. The idea is to generate knowledge for new generations and give them another tool to mitigate the effects of climate change,” said Rodríguez.

In the medium term, hydrogen hubs could be formed in the country, bringing together not only green hydrogen production projects, but also the use in transportation and industrial projects, as well as other issues such as technical and professional training, certification, research and several other topics.

“Costa Rica has very favorable conditions for the development of green hydrogen. It has an almost 100% renewable electricity matrix and has the oldest experience in Latin America thanks to the initiative of Franklin Chang and Ad Astra. In addition, the country’s political and economic stability, coupled with internationally recognized efforts to advance environmental and climate issues, allow Costa Rica to count on the support of friendly countries, as demonstrated by this project,” said Kruse.

In May 2021, the German Development Cooperation GIZ submitted, on behalf of the Costa Rican government, a proposal to the MAF (then NAMA) to compete for funds to develop a green hydrogen project in the country. In October of the same year, during the United Nations Climate Change Conference in Glasgow (COP26), it was announced that Costa Rica’s proposal had been selected, making it the only one selected from Latin America and the first in history to carry out a green hydrogen project of this type.

The project will formally start on September 1 of this year. The German Development Cooperation GIZ will be the organization in charge of its implementation.

The Mitigation Action Facility is a multi-donor fund that aims to finance the implementation of ambitious and transformative projects that drive the decarbonization of economies in different sectors to mitigate the negative effects of climate change.