Argentina H2 group proposes investment promotion scheme

Argentina's hydrogen industry association Plataforma H2 has proposed a special investment promotion regime for low carbon and renewable hydrogen to attract project developers and stimulate the sector's development.

The proposal foresees creation of an incentive scheme providing a series of tax exemptions for companies and mechanisms that are "necessary for the development" of the industry, the group said. Under the proposed terms, renewable hydrogen projects would benefit from the incentives for 30 years, while "low-carbon" hydrogen projects would be supported for 15 years.

The proposal defines renewable hydrogen as being produced through electrolysis powered by renewable sources, as well as "obtained through thermochemical processes from organic inputs". Low-carbon hydrogen would have to have emissions below thresholds that will be defined by authorities using "internationally approved methodologies". This could arguably include hydrogen made from natural gas combined with carbon capture and storage (CCS), as Argentina is hoping to capitalise on gas reserves from its Vaca Muerta shale basin.

Suggested measures to promote renewable and low carbon hydrogen include exemption of customs duties on imported goods, reduced income tax and the possibility of paying value added tax to suppliers of federal tax authorities through the use credit certificates. The document did not explain further how a tax credit certificate would work, but said rules to qualify for the benefit would be established by the "enforcement authority."

The incentives programme would be open to participants across the value chain, from production of renewable power for electrolysis to hydrogen distribution and storage. It would include projects for capture, transportation and storage of greenhouse gases.

The industry group also suggested creating a dedicated fund to help financing projects.

Lawmakers in Buenos Aires started discussions with the private sector about establishing a hydrogen regulatory framework. The government is expected to present a draft bill next month.

The administration of President Javier Milei has put in place the Incentive Regime for Large Investments (Rigi), aimed at facilitating projects with more than $200mn in investments through similar tax incentives. But hydrogen industry participants have said Rigi would lock out hydrogen projects because it will be open for two years only, which is too little time for major projects to be realised.

By Pamela Machado