Green hydrogen: Is Brazil prepared to lead this energy revolution?

The use of biofuels in Brazil dates back to the 1970s, when oil crises sparked interest in alternative energy sources. Since then, the development of biofuels has gone through several phases, from the so-called first-generation biofuels, such as ethanol and biodiesel, to the current development of more advanced technologies with great future potential, such as hydrogen.     

The types of hydrogen used for energy production are classified by color, which represents their production method and environmental impact. The use of hydrogen itself has no emissions impact, but the main aspect that defines the environmental quality of hydrogen and its emissions is its production process, which requires a large amount of energy. There are three main types:

Green Hydrogen: It is the cleanest and most environmentally sustainable type. Produced through the electrolysis of water, using renewable energy such as solar or wind. It does not emit greenhouse gases (notably CO2) during its production, being the only carbon-neutral type.

Blue Hydrogen: considered an intermediate option. Produced from natural gas, but includes the capture and storage of the CO2 generated. Emits less carbon than gray hydrogen, but is not completely emissions-free.

Gray Hydrogen: It is the most common type today, but also the most polluting. Produced from natural gas without carbon capture, resulting in high CO2 emissions.

Because it does not generate pollutant gas emissions during its production or use, green hydrogen is considered a promising solution for the energy transition towards a low-carbon economy (Figure 1).

Figure 1 – Understand the production of green hydrogen.
Source: Reproduced from G1 (2024)

Green hydrogen production offers an important route to decarbonizing key sectors of the global economy, presenting innovative solutions for hard-to-abate industries. In the steel industry, green hydrogen can replace raw materials such as coke and natural gas in the direct reduction of iron ore (DRI) process, drastically reducing CO₂ emissions. Recent studies indicate that the use of green hydrogen in steel production can reduce emissions by up to 98% compared to conventional methods. In the transportation sector, especially for heavy-duty and long-distance vehicles, green hydrogen presents itself as a promising alternative, offering greater autonomy and shorter refueling times compared to electric batteries. In addition, green hydrogen is crucial in the production of green ammonia for fertilizers, contributing significantly to the decarbonization of the chemical industry. Green ammonia not only reduces emissions in fertilizer production, but also emerges as a potential clean fuel for shipping, offering a double-impact solution for reducing global emissions.

The end uses of hydrogen are diverse and promising, with transformative applications in the transportation and industrial sectors. In the transportation sector, hydrogen powers fuel cells in electric vehicles, offering a zero-emissions alternative to fossil fuels. Its application is particularly advantageous in heavy-duty vehicles such as trucks and buses, where it overcomes the range and recharge time limitations of conventional electric batteries. In industry, green hydrogen not only replaces conventional hydrogen in the production of ammonia and other chemicals, but also offers innovative solutions for high-temperature processes in industries such as cement and glass.

Hydrogen also plays an important role in storing renewable energy that is not immediately used, acting as a “buffer.” This means that it helps balance the difference between the amount of energy available and the amount being consumed, especially in electricity grids that use renewable sources such as solar and wind, which produce energy intermittently (i.e. they do not always produce energy at a constant rate). Hydrogen’s ability to store energy for long periods of time is key to ensuring that these grids remain stable and reliable, facilitating a safer transition to a low-carbon economy.

In this sense, green hydrogen is emerging as a crucial element for the global energy transition and decarbonization. According to the World Economic Forum report, green hydrogen has the potential to contribute around 10% of the emissions reductions needed to achieve carbon neutrality by 2050. This positions green hydrogen among the top six technology pathways for emissions reductions on a global scale, according to this study.

The World Economic Forum also highlighted that Brazil, with its vast renewable energy resources, has the potential to become a major player in the global green hydrogen market (Figure 2). It is estimated that by 2030, Brazil could produce between 0,6 and 1,1 million tons of green hydrogen per year, with 60% of this production destined for domestic consumption. By 2050, the country is projected to have the potential to produce between 21 and 32 million tons annually, potentially competing for 10% of the global market. This significant potential puts Brazil in a strategic position to lead the development of the green hydrogen economy in the coming decades.

Within this context, an important comparative advantage of Brazil in relation to this product is the so-called moss green hydrogen, in other words, a subcategory within green hydrogen, which is produced from the use of agro-industrial waste.

As one of the world’s leading agricultural producers, Brazil has an abundance of agricultural byproducts that can be transformed into moss-green hydrogen. This process is advantageous because it adds value to waste that would normally be discarded and can also produce a product with negative carbon emissions. A study by IPEA estimated Brazil’s production of agro-industrial waste at 291 million tons per year, demonstrating the enormous potential for sustainable energy production.

Another significant development is in livestock farming, where biodigesters are used to transform animal waste into methane-rich biogas that can be converted into green hydrogen. This process establishes a link between livestock farming and clean energy production. However, the high cost of implementing biodigesters represents a significant obstacle, particularly for small and medium-sized producers, despite the long-term benefits.

Still in the agricultural context, the production of hydrogen from ethanol has gained relevance as a promising alternative for generating clean energy. In this scenario, the project by Shell Brasil, in partnership with Raízen, Hytron, USP and SENAI CETIQT, deserves to be highlighted. The initiative seeks to demonstrate the viability of producing renewable hydrogen using ethanol as a raw material, taking advantage of the existing infrastructure of the Brazilian sugar and alcohol industry. According to Alexandre Breda, Low Carbon Technology Manager at Shell Brasil, the objective of the project is to “demonstrate that ethanol can be a vector for producing renewable hydrogen, using the existing logistics of the ethanol industry”.

Brazil also has the potential to produce hydrogen from biomethane generated in landfills. This approach not only creates a clean energy source, but also significantly reduces the volume of solid waste in the environment. The use of energy in landfills brings crucial benefits to agriculture and sustainability: it reduces the need for land for waste disposal, freeing up areas for productive use, including agriculture; and it prevents soil and groundwater contamination, preserving vital resources for agricultural production.

Northeast Brazil, with its intense sunlight throughout the year, has another great potential for the development of green hydrogen. The region already stands out for its competitiveness in the generation of renewable energy, especially solar and wind, which offers a solid base for the electrolysis of water and the production of this clean fuel.

Despite the benefits and the diverse raw materials available in Brazil, hydrogen still faces challenges, mainly in relation to transportation and cost.

Due to its high flammability, hydrogen needs to be compressed or liquefied, processes that require a lot of energy, are expensive and still present some degree of risk. Its transportation requires specialized infrastructure, such as pipelines or adapted tanker trucks, which increases logistical costs. Converting green hydrogen into ammonia makes it easier to transport over long distances, but this process, together with the transportation and fractionation costs, can double the final price.

In this scenario, green ammonia emerges as a promising solution for the transportation and storage of hydrogen on a large scale. As an easily storable and transportable liquid, green ammonia can function as an efficient carrier of hydrogen over long distances. A significant advantage is the possibility of using the existing infrastructure for the transportation of fossil ammonia, which is already well developed. Upon arrival at the destination, the hydrogen can be extracted again for final use.

The high cost of producing green hydrogen remains one of the biggest obstacles to its large-scale expansion. Currently, the production of this fuel is more expensive than conventional methods, such as steam methane reforming or coal gasification. However, due to its high energy density and the potential for cost reduction with technological advances and economies of scale, green hydrogen stands out as a promising solution to accelerate the transition to a low-carbon economy.

Latin America, especially countries such as Brazil and Chile, is emerging as a strategic region in this context of falling hydrogen prices (figure 3). The region’s abundant renewable energy generation capacity and competitive production costs position it as a potential global exporter (whether of hydrogen or one of its “carriers,” such as green ammonia).

Source: Reproduction of World Economic Forum (2024)

Projections indicate that by 2030, Latin America could meet between 25% and 33% of global hydrogen demand, putting the region in direct competition with markets such as Australia and Africa. This potential is driven by the region’s vast renewable energy generation capacity, such as solar and wind, which makes hydrogen production more cost-effective.

In Brazil, for example, the development of a green hydrogen hub in the Port of Pecém, Ceará, is positioning the country as a potential hydrogen exporter, with a focus on European markets. A hub is a strategic center where the production, storage and distribution of hydrogen takes place, facilitating large-scale transportation. In this case, a joint venture between the Port of Pecém and the Port of Rotterdam is investing in the creation of the necessary infrastructure for the hub, in addition to establishing a Brazil-Netherlands maritime corridor that will facilitate the export of green hydrogen to Europe. At the same time, Latin America is consolidating itself as a strategic player in the global energy transition, with 11 potential clean hydrogen hubs already identified in the region ready to capitalize on this opportunity.

To encourage the promotion of green hydrogen, Brazil has been a leader in creating policies focused on green hydrogen, with the enactment of Law No. 14.948, known as the "Green Hydrogen Law", in August 2024. This law establishes the legal framework for low-carbon hydrogen, offering tax incentives for research and development, infrastructure and export. The legislation also provides for the reduction of social contributions for companies involved in the production and commercialization of green hydrogen. These incentives seek to stimulate the growth of the sector and position Brazil as a global leader in the transition to a low-carbon economy.

In addition to the new law, Brazil had already launched the National Hydrogen Program (PNH2021) in 2, with the aim of promoting green hydrogen as a sustainable energy source. PNH2 sets goals for the creation of pilot production plants in several regions of the country by 2025, seeking to increase Brazil's competitiveness in this emerging market. However, although the program represents a significant advance, the budget of R$200 million allocated until 2025 is modest when compared to the large investments made by other nations.

Compared to developed countries that have more capital available for investment, Brazil is still at an early stage in the development of the green hydrogen sector. While nations such as the United States, Germany and China are allocating billions of dollars to their energy transition strategies, Brazil faces financial constraints that could slow its progress in this promising market (see more about here).

As the world moves towards a new era of clean energy, Brazil stands at a crossroads with immense potential to lead this revolution. The groundwork has already been laid, with the Green Hydrogen Law and the National Hydrogen Program (PNH2) acting as strategic pillars. However, the success of this journey will require more than just promising legislation. To secure its place at the top of the global green hydrogen market, Brazil will need to overcome significant challenges in infrastructure, financing and international competitiveness. By capitalizing on its abundant renewable energy sources and investing in technology and innovation, the country can turn its potential into reality. With the right steps, Brazil will not only contribute to the global energy transition, but also cement its position as a leader in the new low-carbon economy.

References and Recommended Reading

GERMANY. Federal Ministry for Economic Affairs and Energy. The National Hydrogen Strategy. Berlin, 2020. Accessed on: 30 Jul. 2024.

ARGENTINA. Secretariat for Strategic Affairs of the Presidency. National Strategy for the Development of the Hydrogen Economy. Buenos Aires, 2023. Accessed on: 17 Sep. 2024.

Bhaskar, A., et al. (2022). Decarbonizing primary steel production: Techno-economic assessment of a hydrogen based green steel production plant in Norway. Journal of Cleaner Production, 363, 132480.

BRAZIL. Bank of the Northeast. Green hydrogen: opportunities and challenges. Fortaleza, 2021. Accessed on: 30 Jul. 2024.

BRAZIL. National Bank for Economic and Social Development (BNDES). Biomethane time in Brazil. Accessed on: 30 Jul. 2024.

CHINA. 14th Five-Year Plan. Beijing, 2021. Accessed on: 30 Jul. 2024.

BRAZIL. Diagnosis of Urban Solid Waste. Brasília: Ministry of the Environment, Secretariat of Water Resources and Urban Environment, 2012. Accessed on: 17 Sep. 2024.

BRAZIL. Ministry of Mines and Energy. National Hydrogen Program (PNH2). Brasília, 2021. Accessed on: 17 Sep. 2024.

CHILE. Ministry of Energy. National Green Hydrogen Strategy. Santiago, 2020. Accessed on: 17 Sep. 2024.

CLIMATE CHAMPIONS. World's green hydrogen leaders unite to drive 50-fold scale-up in six years. Climate Champions, 2020. Accessed on: 30 Jul. 2024.

UNITED STATES. Internal Revenue Service. Inflation Reduction Act. Washington, DC, 2022. Accessed on: 30 Jul. 2024.

COLOMBIA. Ministry of Mines and Energy. Colombia's hydrogen roadmap. Bogotá, 2021. Accessed on: 17 Sept. 2024.

G1. Clean energy regulation with green hydrogen advances in Congress: understand how it should work. Politics, July 10, 2024. Accessed on: 17 Sep. 2024.

G1. Clean energy regulation with green hydrogen advances in Congress; understand how it should work. Politics, July 10, 2024. Accessed on: 25 Sept. 2024.

Jacobson, M.Z., et al. (2023). Impacts of green hydrogen for steel, ammonia, and long-distance transport on the cost of meeting electricity, heat, cold, and hydrogen demand in 145 countries running on 100% wind-water-solar. Energy and AI, 13, 100138.

Ma, Y., et al. (2023). Green steel produced with ammonia. Advanced Science, 10(12), 2300187.

Columbia University Center on Global Energy Policy. (2021). Green Hydrogen in a Circular Carbon Economy: Opportunities and Limits.

WORLD ECONOMIC FORUM. Accelerating the Clean Hydrogen Economy in Latin America. Geneva: World Economic Forum, 2024. Accessed on: 17 Sep. 2024.

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