Brazil’s senate approves extra R5bn in H2 tax credits

Brazil's senate has approved the hydrogen regulatory framework draft bill including an additional 5bn reals ($917mn) for the tax credit scheme for production and consumption of renewable hydrogen.

The amount brings the total budget allocated for tax credits to R18.3bn, which will run for five years from 2028 until 2032 (see table).

This could support around 2.8mn t of hydrogen production at a credit of R6.58 per kg, which would be given to first production projects according to the draft from last month. The final values of the credits are yet to be agreed.

The tax credits are set to benefit electrolytic hydrogen produced with renewable hydrogen given that the scheme will prioritise projects with lowest emission of greenhouse gases. The bill also establishes incentives that will be available for low-carbon hydrogen production pathways such as natural gas with carbon capture and storage (CCS) and from biofuels. These include tax exemptions on imported products, raw materials and equipment.

The bill will go for voting at the Chamber of Deputies before becoming law.

Amendments to the bill such as the definitions of "renewable" and "green" hydrogen will continue to be discussed.

By Pamela Machado