Climate change is leading a shift away from fossil fuels to clean energy, a transition that’s creating enormous opportunities. Techint Engineering & Construction has set up an energy transition department to provide over 75 years of know-how to this new business.

“It’s not an option today for Techint to ask whether or not it will participate in the energy transition,” said Hernán Milberg, Energy Transition Manager at Techint E&C. “If you don’t, you’ll die.”

The question now is how to seize this opportunity.

Milberg and his team have learned much about how to do this in the last three years.

“In the first year, everyone was talking about the need to decarbonize, but everything was up in the air,” the Manager remarked. “In the second year, we began to do feasibility studies, such as how to put a hydrogen carbon capture plant on a site and the cost. In 2022, we started to do conceptual engineering, which has more details like equipment quantity and sizes. This is when the costs are estimated in a more detailed way, and the ideas go from being very in the air to being projects. In 2023, we are in the basic and extended basic engineering phase, which is when the projects take on much more momentum.”

The Department of Energy Transition of Techint Engineering & Construction, formally created in 2023, is made up of a team with plenty of experience in the energy transition working out of offices in Italy, Spain, India, Latin America, and the United States. They work closely together to find opportunities in Europe and Latin America while studying future business trends in the United States.

There are many opportunities in the energy transition. In Italy, 80% to 90% of Techint E&C’s projects are in energy transition, including liquefied natural gas, Milberg underlined. In Latin America, more companies are getting into such projects, from Hydrogen and E-Fuels in Chile to Ammonia plants in Brazil.

Regardless of the region, the projects are much the same.

“The energy transition is global,” the Manager held. “What companies are doing in the United States or Europe is what companies in Argentina, Brazil, and Mexico are working on or requesting. What happens in Italy is also happening in Chile.”

The transition fuel

Renewable energy is a significant source of growth in the energy transition, but a larger opportunity for the Techint Group is in natural gas.

“We see gas as an engine of the transition from today’s critical situation of emissions to an ideal scenario of no emissions within 30 years,” Milberg assured.

Techint E&C is considering several LNG projects in Latin America. Argentina could be a significant source of growth for exporting LNG from Vaca Muerta, one of the world’s largest shale plays. Mexico is looking at a large LNG export project as well.

Gas may not be as clean as hydrogen and synthetic fuels, nor can it reduce emissions like carbon capture technologies. Still, he said it has an immediate role to play in the transition because of the available production and logistics capacity – and because it is less polluting than other fossil fuels when burned.

By comparison, carbon capture, hydrogen, and synthetic fuels are still incipient. “There are not yet the technologies and the scale to be able to switch to them tomorrow,” Milberg emphasized, adding that the other challenges for these technologies are the availability of financing and equipment.

Bottlenecks

Take low-emission hydrogen. According to the International Energy Agency, the capacity to manufacture electrolyzers for making this hydrogen is nearly 10 GW per year. While that could exceed 600 GW per year by 2030, the immediate bottleneck could stall many projects, the Manager warned.

The good news is that companies and governments “are working together to see how to speed this up,” he said. “The intentions are there, and many countries have outlined their energy transition plans. If hydrogen was only a utopia a few years ago, today it is beginning to be mobilized.”

Even so, there is still a long way to go in transitioning to net-zero emissions by 2050. While Milberg remarked he doesn’t expect any more oil refineries or coal power plants to be built without Carbon Capture and fewer gas-fueled power plants, the transition will require both a big push to increase clean energy production and careful planning to avoid any adverse effects.

“If you put a very high tax on emitting CO2 with the idea that you can incentivize zero-emission projects, but those projects are not ready to meet demand, the emissions will continue,” he said. “The only thing that will happen in this scenario is that mass products will become more expensive because fossil fuels will be more expensive with the tax. That will translate into higher food and transportation prices.”

Despite this risk, the time to start energy transition projects is now, given that many can take ten years from idea to completion. Milberg expects LNG projects to get off the ground first in Argentina and Mexico, while the first hydrogen and carbon capture project will follow in Latin America before 2030.

Overall, he said companies will seek to position themselves in the energy transition this decade, after which “projects will fly” in the 2030s.