Tax rebates and potentially other measures would still be needed to get the country’s relatively cheap green H2 near cost parity with grey hydrogen, the founder of trade association ABHIC tells Polly Martin
Brazil is said to be one of the cheapest places in the world to produce green hydrogen, due to its strong winds and sunshine, and the EU has pledged to invest up to €2bn to help scale up renewable H2 projects in the country.
But while the prospects for green hydrogen in the country are excellent, green hydrogen developers in Brazil remain in limbo as they wait for the passage of a long-awaited regulatory framework for clean H2, the latest iteration of which could include tax incentives.
The first bill on clean hydrogen, for use in industry and transport, and mandated 5% blending in gas pipelines from 2032 and 10% by 2050, was killed off last year in 2023.
However, it was quickly replaced by Bill No. 2308/2023, which was passed by the lower house of Congress at the end of last year. This proposal sets a carbon intensity threshold of 4kgCO2e/kgH2, while offering a tax rebate of up to 10% on imported equipment and construction materials over ten years.
However, while the latter bill was meant to go forward to a Senate vote in May, this was delayed after a request for review was granted, with a new vote reportedly scheduled for this week.
The text has already reportedly been amended to move back the start of tax credits from 2027 to 2028, while also including extra requirements for local content and the lowest possible carbon intensity for projects to access these rebates.
“The fact that Brazil still does not have a hydrogen regulatory framework brings legal uncertainty for investment, especially in the case of hydrogen, which requires intensive capital,” said Sergio Augusto Costa, founder and president of Brazil’s trade association for hydrogen and sustainable fuels, ABHIC, in an interview with Hydrogen Insight.
“The most important thing is to have the regulatory framework approved quickly,” he said.
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