Legal Framework for Low-Carbon Hydrogen in Brazil
On 2nd August 2024, Federal Law 14,948/2024 (here in Portuguese) was enacted, establishing the legal framework for low-carbon hydrogen in Brazil.
Below are the key points:
- Carbon Emission Criteria: The law defines low-carbon hydrogen as that which results in carbon dioxide emissions not exceeding 7 kgCO2eq/kgH2 throughout its life cycle.
- Renewable Hydrogen and Certification: The Brazilian Hydrogen Certification System (SBCH2) is introduced as a voluntary initiative to certify the intensity of GHG emissions in hydrogen production.
- REHIDRO: Companies that join the Special Incentive Regime for Low-Carbon Hydrogen Production (REHIDRO) will be able to enjoy significant tax benefits. REHIDRO requires further regulation, but it is expected to benefit the following items when used in hydrogen production projects:
a) Sale of new machines, devices, instruments, and equipment for incorporation in hydrogen projects;
b) Sale of construction materials;
c) Provision of services by companies established in Brazil;
d) Rental of machines, devices, instruments, and equipment. - National Hydrogen Programme (PNH2): Incorporated into the National Low-Carbon Hydrogen Policy, PNH2 will be the central instrument in coordinating public policies related to the sector. The programme aims to optimise resource utilisation and foster the sustainable growth of the green hydrogen market in the country.
- Authorisation and Regulation: The production and commercialisation of low-carbon hydrogen will require authorisation from the National Agency of Petroleum, Natural Gas and Biofuels (ANP), with simplification for small volumes and use as inputs.
- Role of ANEEL in Facilitating Energy Infrastructure: To facilitate the expansion of the necessary infrastructure for the production and distribution of low-carbon hydrogen, the National Electric Energy Agency (ANEEL) may declare land as of public utility.
The chapter providing for the granting of R$ 18.3 billion in tax credits and the creation of the Low-Carbon Hydrogen Development Programme (PHBC) was vetoed for the submission of a new project, which is already under consideration in the House of Representatives.
This alert was produced by partners Thiago Luiz Silva and Camila Borba Lefèvre, both from the Energy & Natural Resources: Energy Transition area, who are available in case of doubts.