Uruguay and Argentina seek to stop the green hydrogen plant repeating the pulp mill conflict

The governments of Uruguay and Argentina are attempting to prevent tensions from escalating over the planned green hydrogen and synthetic fuels plant in the Uruguayan department of Paysandú, situated along the Uruguay river. This project, valued at approximately 5.4 billion dollars and considered the largest foreign investment in Uruguay's history, aims to generate e-fuels from green hydrogen derived from renewable energy and carbon dioxide obtained from biomass.

It is expected to create around 3,000 direct jobs, with an initial investment of about 1 billion dollars.

The project's original location, situated roughly three kilometers from the Colón city in Entre Ríos and facing its shoreline, faced objections from Argentina due to potential visual impacts on tourism and waterway pollution. Following bilateral negotiations involving two meetings at Uruguay's foreign ministry, one in November and another in April, the parties reached an agreement to relocate the plant to a site owned by the state oil company Ancap.

Uruguayan President Yamandú Orsi announced on Friday that Argentina had withdrawn its "criminal complaint" against the project, deeming it as positive diplomatic news. In response, Argentine federal prosecutor Josefina Minatta stated that she had not withdrawn her complaint and would continue it if Uruguay fails to provide information on potential contamination. Deputy Guillermo Michel mentioned that his preventive civil action against the project remains ongoing.

The situation has been attributed to a miscommunication, with Uruguay's presidency secretary, Alejandro Sánchez, attributing the situation to a mix-up. He clarified that what was dropped was a submission by Colón's deputy mayor to the support committee of the Escazú Agreement, a regional treaty on access to environmental information.

Colón municipality, however, disputed these claims, stating they had never filed a complaint and had only requested access to the Uruguayan case file, which they obtained before withdrawing from further consultations on August 25.

Both governments are striving to prevent a recurrence of the conflict surrounding the Fray Bentos pulp mill, which took place between 2005 and 2010. This dispute led to prolonged blockades of international bridges by Argentinian residents and an international court case brought by Argentina against Uruguay. The commercial agreement for the plant remains open, with outstanding issues related to infrastructure ownership, investment division, and the pricing of electricity supplied by the state utility UTE.