"In Brazil, we are fortunate that the grid is already 84% green. In Argentina, we are buying 85% of our power from the Los Teros wind farm."
What have been the main demand trends Air Products has experienced in Brazil and Argentina?
Air Products experienced good demand over the past year. The food sector has been particularly resilient – the pandemic resulted in people consuming more industrialized and frozen foods, which is a good opportunity for us as we supply food grade gasses and modified atmosphere packaging (MAP) solutions to preserve foods for a longer period.
In Argentina, many petrochemical and chemical companies are producing large volumes and they are using nitrogen to purge their facilities, reactors, and vessels for maintenance. This generates significant demand for Air Products’ solutions, and we have been providing them with nitrogen, oxygen, hydrogen, argon, carbon dioxide, gas separation and purification technologies, and technical support.
The construction market in Brazil has been strong as Brazilians move up the property ladder and invest in upgrading and remodeling their homes. This has generated demand for oxygen for furnaces, as well as oxygen and nitrogen to cement, lime, and glass plants to increase production, improve efficiency and safety, and lower emissions. Automotive demand also started to rebound, where Air Products offers a full range of high performance and industry standard gases such as nitrogen, hydrogen, argon, helium, oxygen, carbon dioxide, and gas mixtures to help manufacturers and suppliers improve product quality and reduce costs.
Can you tell us about Air Products’ investments into green hydrogen?
Air Products has been a pioneer in hydrogen fueling for decades, and the area of green hydrogen represents a key focus globally. For example, Air Products, ACWA Power and NEOM signed an agreement to construct the world’s largest green hydrogen production facility in Saudi Arabia – a US$5 billion project which will supply 650 tons per day of carbon-free hydrogen.
There are good opportunities for green hydrogen in Brazil, especially now that steel companies have taken the decision to produce green steel in the country. Brazil can be a significant green hydrogen exporter, but also has the potential to internalize different supply chains.
Argentina has significant biomass potential to generate green power. By harvesting biomass, you are actually capturing CO2, allowing for a virtuous cycle. Most industries in Argentina see the potential to use green hydrogen locally, because in addition to the environmental benefits, these initiatives create job opportunities.
What benefits have you noticed from Brazil’s ‘New Gas Market’ legislation which was introduced in 2021?
We have seen some changes, with the most important being contracts signed between companies producing biomethane and companies willing to buy biomethane in the open gas market. Customers can use the pipeline and are paying a distribution and transmission fee, which has currently been set at about US$1 per million BTU. Any company willing to produce biomethane can inject the biomethane in the Brazilian natural gas grids and sell to customers willing to buy.
More companies are looking for access to natural gas. The situation in Ukraine distorted the market to a degree, as companies were thinking about importing LNG and injecting it into the grid, but this was delayed. People then suddenly opened their eyes to the biomethane market, as after the Russian invasion, natural gas prices skyrocketed and investment into local biomethane production started to make sense. Today, landfills in Brazil are starting to become professionally managed to capture and sell the biomethane that is generated.
Can you tell us about Air Products’ ‘Third by 30’ initiative from the perspective of Brazil and Argentina?
Air Products’ operations in Brazil and Argentina offer some inherent advantages with respect to the company’s Third by 30 goal to reduce its CO2 emissions intensity (kg CO2/MM BTU) by one-third by the year 2030 from a 2015 baseline. In Brazil we are fortunate that the grid is already 84% green. In Argentina, we are buying 85% of our power from the Los Teros wind farm. By addressing how we buy power, we make significant progress in reducing CO2 emissions.