Green hydrogen represents a huge opportunity for agribusiness

Graduated in Social Communication from the Armando Álvares Penteado Foundation (FAAP) and with an MBA in Marketing from the Getulio Vargas Foundation (FGV), Monica Saraiva Panik says she became an engineering researcher “by osmosis”. “Since I graduated, I have worked in the automotive industry, surrounded by engineers. I married one 25 years ago”, she says.

Born in São Paulo, Monica moved to the outskirts of Stuttgart, Germany, in January 1997, when her German husband, a director at the automaker Daimler, was called back to his country. From the following year on, Monica began to delve deeper into research into green hydrogen, which was already advancing in the European country, but not with the amount of resources and sense of urgency that it has today. “At the time, the focus was on decarbonizing mobility and developing fuel cell technology in vehicles,” says Monica.

The situation began to change in late 2017, when countries in Europe, Asia and the United States concluded that it was necessary to simultaneously decarbonize industry, transport and energy generation. In this context, hydrogen began to be considered one of the pillars of the energy transition, capable of contributing to the reduction of greenhouse gas emissions in various sectors of the economy.

But it needs to move even faster, Monica points out. “The current scenario represents a huge opportunity for Brazil, among other countries with great potential in renewable energy sources, which can take advantage of the six-year window until 2030, when the large-scale hydrogen and derivative production units announced globally will be operating. In addition, international trade and local markets will be mature, guided by the commitment to achieve a 50% reduction in CO2 emissions,” says the Brazilian researcher, who is currently a hydrogen mobility mentor at SAE Brasil (an association that brings together engineers, technicians and executives in the mobility sector) and curator of the BW Expo Summit Digital (a movement that promotes best practices to reduce the environmental impact of human activities).

The researcher, who was recently named one of the leading women in the transport sector by the German Federal Ministry for Economic Cooperation and Development (BMZ) and the German Society for International Cooperation (GIZ), points out that Brazil entered the race for green hydrogen late, but has great potential to gain global relevance in this market. She also states that Brazilian agribusiness, in particular, can benefit enormously from technologies in this area.

In the following interview, Monica analyzes the current scenario, talks about the prospects for the coming years and points out paths, especially for the fertilizer industry.

What is the real role of hydrogen and green hydrogen in the current context of energy transition?
Monica Saraiva Panik – When I started working in the hydrogen industry 25 years ago, it was seen only as an alternative fuel for mobility. Starting in the late 1990s, American, European and Japanese automakers took the technology out of the research and into the development sector, with the goal of producing fuel cell-powered vehicles.

At that time, the United Nations Development Program (UNDP) launched a demonstration initiative for fuel cell-powered urban buses in five countries, including Brazil. I followed the feasibility studies of all the groups. Brazil and China went ahead with their initiatives. I dedicated myself more to the Brazilian project, due to synergy, acting as a manager. I worked on the initiative for 16 years, finishing in 2016. The project resulted in four hydrogen-powered buses running in the metropolitan region of São Paulo and a green hydrogen production and refueling station in the garage of the São Paulo Metropolitan Urban Transport Company (EMTU). If it were today, this project would have much more visibility and continuity, because the hydrogen sector gained another dimension by linking itself to the decarbonization goals committed to in the 2015 Paris Agreement.

What technical difficulties in the use of hydrogen have been overcome, particularly with regard to mobility?
The green hydrogen industry is currently one of the most invested in. In some countries, such as Germany, where development began earlier, it is already a consolidated sector. More than just a technical one, the challenge at a global level is to gain scale.

As the market has grown, countries with consolidated industries are unable to meet the announced demand. There are currently 200 gigawatts (GW) of electrolysis capacity in the world in announced projects to produce green hydrogen and derivatives by 2030, according to global consulting firm Roland Berger. We are facing a very large future demand, which the plants currently installed will not be able to meet.

This scenario represents a huge opportunity for Brazil, which has an established industrial park with a large presence in the global hydrogen and fuel cell industry, and can host new production lines for components, machinery and equipment, with the aim of first serving the global market and, later, the domestic market. However, Brazil needs to take advantage of the six-year window until 2030, since it is competing with other countries, such as South Africa, Australia, China and the United States. By 2030, the global hydrogen sector will be mature and the leadership of countries and regions will already be consolidated.

It is a competition, and Brazil, with its immense potential for renewable energy, can become one of the leading countries in the technological race and energy transition, attracting a large part of the investments in the green economy and generating jobs in all links in the green hydrogen and derivatives chain.

What is Brazil's potential in this area?
The migration to green hydrogen is much simpler in a country like Brazil, whose electricity matrix is ​​over 90% renewable. This is the country's greatest treasure. No other large nation has a consolidated renewable electricity sector. In all regions of the country, there are numerous renewable energy sources to expand and diversify the production of green hydrogen and derivatives, including solar and wind power (onshore and offshore), hydroelectric power and biomass waste, including using the National Integrated System (SIN).

Brazil took a long time to position itself in the global market as a potential producer, consumer and exporter of green hydrogen and derivatives. Until February 2021, the country did not appear on the global map of the hydrogen sector. In Latin America, only Chile was mentioned. The Brazilian scenario changed in February 2021, when the state of Ceará launched the country's first green hydrogen hub. Since then, other states began to announce incentives, attracting more than 30 billion dollars in investments announced by national and international companies. Today, there are projects from north to south of Brazil, starting with Ceará, then Rio de Janeiro, Bahia, Pernambuco, Rio Grande do Norte, Paraná, Santa Catarina, Minas Gerais and Rio Grande do Sul.

In the rest of the world, the main motivation came from federal governments, which launched their national hydrogen programs. In Brazil, it began with the private sector, with investors in the electricity sector seeing an opportunity to generate new business in the production chain of green hydrogen and derivatives, and contributing to the industrialization of value-added products from renewable energy, such as green fertilizer, green steel, green cement and others. The mobilization of the states took the hydrogen issue to the Senate and the Chamber of Deputies, and the sector became a priority for various ministries and government agencies.

What will be the role of agriculture in this context?
One advantage of green hydrogen is its transversality. It can be used by all sectors of the economy. It can store energy generated by intermittent sources. And it also serves as an input for the manufacture of a series of products, including ammonia, methanol, green gasoline, kerosene, cement, paper, glass and steel.

However, to replace 100% of the coal used in processing iron ore for steel production, the steel industry needs to replace blast furnace technology with so-called DRI (direct reduction), which will take some time. Entire production models will need to be rethought. In the case of agriculture, the application is immediate. A fertilizer factory can replace gray hydrogen, produced from natural gas, with renewable hydrogen to obtain green ammonia. There is no need to change the manufacturing process at all.

This means that Brazil could stop being an importer of fertilizers with a high carbon footprint and become a producer and exporter of low-carbon fertilizers — and therefore, high added value. It would be possible to generate jobs and wealth locally, reducing dependence on an input that is so important to producers. It is even possible to produce this green hydrogen locally, using biomass residues, in order to obtain ammonia in locations close to the farmer's operation.

In turn, the sugar and ethanol sector already recognizes that hydrogen is not a competitor. On the contrary, it opens up opportunities for the sector, which can produce green hydrogen in several ways, such as through water electrolysis, waste gasification, and biogas or ethanol reforming. The best technological route is defined according to the characteristics of each region and the plants themselves. In addition, the sugar and ethanol sector has the most sought-after CO2 in the world, which is biogenic CO2, specified in the European certification criteria. The market is huge because, with green hydrogen, it is possible to produce a series of derivatives, expanding the line of products sold by the sector.

Does Brazilian agriculture already understand the opportunity that hydrogen represents?
The company understands the importance for the future, but, in general, it has not yet been able to visualize the scale of this opportunity. More information needs to be circulated about the potential of this market and the possibility of implementing it quickly. But the outlook is positive. Year after year, Brazil is making progress in the hydrogen sector. By 2024, it is necessary to provide incentives for the decarbonization of industry and transportation, as well as foster reindustrialization and workforce training for new technologies, bringing new production lines and new investments to the country, in addition to incentives for projects throughout the green hydrogen production chain, which begins in the renewable energy sector, goes through production, storage and logistics distribution in all modes, until reaching the consumer sectors in industry, transportation and decentralized energy generation.

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