Brazil - is one of the largest countries in the world with an area of 8,515,770 Km2. Brazil is one of the largest energy producing countries in the world and the third–largest producer in the Western Hemisphere. In 2022, according to International Monetary Fund (IMF), Brazilian nominal GDP was USD1.894 trillion. It is one of the world’s giants of mining, agriculture, and manufacturing, and has a strong-growing service sector.
Thermals (coal, gas, oil and nuclear) represent 16 percent of the Brazilian electricity matrix (1). According to the Ministry of Mines and Energy (MME), Brazil is expected to add 15 GW of centralized power generation capacity by 2025. Investments in utilized-scale power generation are estimated to reach $62 billion by 2029, while distributed generation should see investment of $10 billion in the same period. Looking at the country’s energy profile, it is clear that a huge part of its renewables come from biofuels and hydro.
Total hydrogen demand in Latin America could see significant growth to 2030, with most additional demand coming from existing uses in oil refining and industry. In the Baseline case (The Baseline case describes how demand for hydrogen could evolve considering energy- and climate-related policies already in place in the countries of the region, and an uptake on demonstrated technologies following commercialization trends observed in other low-carbon energy technologies), total demand increases by 52 percent to reach 6.2 Mt. Practically all the additional 2.1 Mt of hydrogen demand comes from existing uses in oil refining and industry, while demand for transport and new applications in industry remains very limited. In the Accelerated case (The Accelerated case reflects an optimistic vision for the deployment of hydrogen end-use technologies to 2030, assuming that more ambitious energy- and climate-related policies are put in place and that the required techno-economic and infrastructure progress for the analyzed applications will be achieved by that year), total demand increases by 67 percent to reach 6.8 Mt. New applications in industry and transport expand significantly to meet more ambitious energy and climate targets, while hydrogen demand for oil refining grows less than in the Baseline case.
In 2019, six countries in Latin America, including Brazil, accounted for about 87 percent of the region’s hydrogen demand. Brazil’s hydrogen demand stood at about 400 kt in 2019. Oil refining accounted for 83 percent of total demand. The remaining volumes were used for ammonia-based fertilisers production.(2) It is estimated that the Levelized Cost of green Hydrogen produced in Brazil would be around USD 1.50/ H2 kg in 2030. The cost is estimated to drop to approximately USD 1.25/kg.
Brazil has the potential to be competitive and fight for a share of the US and EU import markets, capturing USD 1 to 2 billion by 2030. By 2040, exports could reach USD 4-6 billion, or 2-4 million tonnes of green hydrogen(3) . The domestic market is the largest opportunity for Brazil, and by 2040 can reach USD 10-12 billion, driven mostly by trucking, green steel, and other industrial energy uses.
Brazilian Government launched the Guidelines for National H2 Program (PNH2) in August 2021 and related actions are under development and coordination of the Brazilian Ministry of Mines and Energy (MME). The PNH2 was developed to mobilize public and private sectors, as well as academia, together with international cooperation, to accelerate the development of a comprehensive and competitive hydrogen market. The Program realizes six critical areas (Figure XX):
The Brazilian government commitment to build a low carbon hydrogen economy includes:
In addition, there are public policies for renewables in Brazil, which will contribute to boost low carbon hydrogen economy. Policies such as tax reliefs or taxes differentials for renewables and/or in Export Processing Zone (EPZ) and infrastructure, green finance and specific funds to renewables and infrastructure investments. There are also recent programmes under discussions, for instance, the Fuel for the Future (Fuel Cell, Advanced biofuels, e-fuels, etc.) and carbon pricing, which will reinforce exiting programs.
In December 2020, the Ministry of Mines and Energy issued the Brazilian National Energy Plan 2050, outlining the directives for the long-term strategy for the Brazilian energy sector. The 2050 Energy Plan dedicated a chapter to hydrogen, listing it as a disruptive technology, capable of significantly changing the energy market. The Energy Plan also highlights that hydrogen may help solve energy challenges such as reduction of carbon emissions in hard-to-decarbonize sectors, storage of renewables, safety in the energy supply due to the flexibility and diversity in its use cases. The 2050 Energy Plan also listed fuel cells as a potential key technology for the decarbonisation of the transportation sector in Brazil going forward.
Bill of Law No. 725/2022 aims to establish rules and incentives for hydrogen produced using renewable energy sources. It is currently under discussion in the Brazilian Senate. If the bill is signed into law, the National Petroleum Agency (ANP) would become responsible for regulating, authorizing, and inspecting the activities of the hydrogen chain. The measure would be a significant regulatory step forward, considering the multiple sources involved in the production of hydrogen. The Bill does not propose a guideline for green hydrogen certification, which could pose a challenge in practice. It may be necessary to develop a certification mechanism to guarantee not only the use of renewable energy in the production process but also throughout its supply chain.
Taking advantage of the great variety of sources for hydrogen production, Brazil's abundant natural energy resources beyond renewable energy, such as ethanol, natural gas, biogas, biomass and even natural hydrogen reservoirs also contribute greatly for the country's potential to become a major hydrogen producer and exporter.
The Northeast region of Brazil has reliable winds, with stable wind speed that also does not frequently change direction. It also has a high average solar irradiance, which means there is good potential to produce both wind and solar energy.
The neighboring state of Rio Grande do Norte, which is the national leader in wind energy production, can also generate electricity from the wind to supply to green hydrogen plants. Three companies have signed MOUs with this state to set up green hydrogen plants that will use energy supplied by future offshore wind farms.
In 2020, Brazilian emissions grew by 9.5%, while across the world they fell by almost 7%. This explains the need and significance of hydrogen in the country.
In 2020 wind and solar accounted for 10% and 2% of Brazil’s generating capacity respectively, but these numbers are expected to rise to 30% and 17% by 2040, largely driven by the falling RE prices. The Levelized Cost of Energy for wind energy in the Northeast of Brazil was around USD 3.5 – 7.8/MWh and is expected to drop by around 27% by 2040. The LCOE for solar energy is around USD 8 - 9/MWh in the Southeast, and USD 7 - 9/MWh in the Northeast, and is estimated to fall by 46% by 2040(4) . Producing green hydrogen using power from offshore winds is a viable option that can give the country a competitive edge.
Endowed with abundant wind and solar energy potential, an integrated, low-carbon power grid and geographic advantages to export to Europe and the east coast of North America, plus a significant domestic industry, Brazil has an opportunity to become one of the world leaders in the production of green hydrogen. In Brazil, wind and solar can be combined at the same location (such as at the countryside of the states of Ceará, Piauí and Bahia), thus optimizing hydrogen production projects.
The development of biogas and biomethane can support the hydrogen scaling-up process in the region and play an important role in country’s clean energy transitions. Brazil’s biomethane potential alone could represent 12% of the global total(5) . In addition, Brazil hosts the only commercial CCUS facility in Latin America - the Petrobras Santos Basin Pre-Salt Oil Field CCS project. This is the only offshore EOR project in operation in the world.
In additions, since Brazil produces most of the electricity from different types of renewables, there is a conducive environment for the construction of new renewable energy capacity. The mature wind and solar industries in Brazil have the resources to develop large projects given the acquired knowhow by the workforce  and the established supply chain. Also, there is a solid regulatory framework for large renewable projects, allowing large projects to be developed in short timeframes.
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Country's first industrial-scale green hydrogen production plant, by Unigel, came up in 2022. The project includes three standard 20 MW electrolysers supplied by Thyssenkrupp nucera, with a second phase expected to expand the project's capacity beyond 100 MW.
Shell's Brazilian subsidiary is also working on hydrogen projects, in collaboration with the port of Açu. The two are developing a pilot plant at the port, north of Rio de Janeiro, with an initial capacity of 10 MW. They aim to eventually develop a 100 MW green hydrogen production facility at the port.