Brazilian governors back renewable H2 support bill

A group comprising the governments of nine states in northeast Brazil has endorsed the latest amendments filed in the country's hydrogen bill, which envisage generous tax credits and financial incentives for renewable hydrogen production and demand.

Governors from the nine states have joined calls by the Brazilian green hydrogen industry association ABHIV to push the national government to embrace the suggestions, recently filed by senator Otto Alencar.

The consortium, which is an instrument for "political, judicial and economic" integration of the states that make up the northeast region, is urging more support from federal government at the World Hydrogen Summit in Rotterdam.

The current pipeline of planned projects in the northeast would amount to approximately 12mn t/yr of renewable hydrogen production, and "if only 10pc of these projects materialise, it would already place us in a global leadership position," Piaui's governor and consortium representative Rafael Fonteles said.

The proposals in the bill resemble incentives that were given to other energy sectors such as ethanol and biodiesel to make alternative sources more competitive, ABHIV director Fernanda Delgado said. "Brazil knows how to do these policies, this is not new".

The amendments are currently being discussed by the senate. ABHIV expects some pushback from the finance ministry regarding the tax credits, mainly regarding the 20-year offer, Delgado told Argus, but the initial proposal has left some room for negotiation and even a more modest version will already help the industry, she said.

The current proposal envisions tax credits to up to 15GW of electrolyser capacity in the country, with up to 6.58 Brazilian reais ($1.27) per kg for production and 8.55 reais/kg for domestic consumers.

While the northeast of Brazil offers competitive renewables generation and available land, these factors alone are "not enough" because "competition is worldwide," according to the head of Latin America at French renewables firm Voltalia, Robert Klein. The first molecules will be the most expensive ones and the tax cashback will help make them more competitive and projects reach gigawatt scale, Klein said.

Momentum has accelerated for Brazilian renewable hydrogen projects, although almost all are at a very early stage. During the event, Brazilian utility Eletrobras signed an agreement to support European group Green Energy Park's planned renewable hydrogen and ammonia production in Piaui with electricity transmission infrastructure.

By Pamela Machado