The government of Uruguay has approved the location of a controversial $5.3bn green hydrogen and methanol project proposed by HIF Global, after the developer scaled back plans in response to furious objections from neighbouring Argentina.

The Uruguayan government has formally granted the project — believed to include around 1.1GW of electrolyser capacity — Environmental Location Feasibility (VAL), an essential permitting step that states that the site chosen is environmentally suitable.

HIF Global can now proceed with submitting technical documents for the next stages of permitting, the Environmental Prior Authorisation (AAP) and the Environmental Impact Assessment (EIA), both of which will be assessed by various government agencies taking into account environmental, social and cultural aspects of the development.

Construction on the project is scheduled to begin in 2026, with first operation planned for 2028.

“This is a key milestone in the environmental evaluation process and allows us to stay on track with our development timeline,” said Martin Bremermann, CEO of HIF Uruguay. “HIF Paysandú would be the first commercial e-Fuels facility in Latin America, a great opportunity for the region and a step that positions Uruguay as a leader in innovation, sustainability, and the energy transition.”