Ecopetrol S.A. EC, a Colombia-based energy firm, has announced its plans to construct a new green hydrogen plant at its refinery in Cartagena, with an expected production capacity of 800 tons of green hydrogen per year. Per Ecopetrol, this should make it the largest renewable energy producing plant in Latin America.

EC’s Role in Clean Energy Generation

The president of Colombia, Gustavo Petro, has prioritized reducing the country’s dependence on fossil fuels. Ecopetrol is anticipated to be a key part of the Caribbean nation’s transition from fossil fuels to cleaner sources of energy. The Colombian energy firm had previously mentioned that it may also participate in auctions to bid on regional offshore wind projects.

The green hydrogen produced at the plant will be integrated into the existing capacity of the Cartagena refinery and used for hydrotreating fuels. This process is expected to reduce carbon emissions by up to 7,700 tons, equivalent to the emissions from approximately 1,650 vehicles annually.

Per Ecopetrol, the new green hydrogen plant is expected to benefit Colombia as it implies that the largest energy company in the nation is moving toward clean energy production. This aligns with the global trend of transitioning from fossil fuels to cleaner energy sources with a lower carbon footprint. The plant is anticipated to begin commercial operations in the first half of 2026.

Financial Implications

Ecopetrol stated that the production of green hydrogen is likely to contribute in the range of $400-$485 million to its EBITDA annually by 2040. This signifies that producing low-emission hydrogen will enable the company to diversify its revenue streams while focusing on reducing its emissions. The management attributes the cost-effective production of low-emission hydrogen, supported by advanced technologies, to its earlier decision to establish a solar farm at the Cartagena refinery.

EC’s Zacks Rank and Key Picks

Currently, EC carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Smart Sand, Inc. SND, FuelCell Energy FCEL and Nine Energy Service NINE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Smart Sand is a low-cost producer of high-quality Northern White frac sand, an ideal proppant for hydraulic fracturing and various industrial applications. The company provides proppant and other logistics services for several companies in the oil and gas industry. With sustained oil and gas market demand, SND is expected to see growing demand for its services, providing a positive outlook.