An international study conducted by the German consultancy Roland Berger found that Brazil has the potential to become the world's largest producer of green hydrogen, with annual revenues of R$150 billion by 2050 - of which R$100 billion will come from exports.
The study shows that the country has the ideal conditions for mass production of the missing energy to drive the transition to a low-carbon economy, such as large supply of renewable energy, low marginal costs, and production potential far beyond what the domestic market can absorb. To meet global decarbonization targets, global hydrogen consumption will need to increase six-fold over the next 30 years, especially in industrial applications and clean mobility.
Jorge Pereira da Costa, partner head of energy at Roland Berger in Brazil, said that the demand for this energy source is expected to give the country a prominent role in the energy transition. Mr. Costa co-authored a paper on the opportunities for green hydrogen in Brazil.
According to him, green hydrogen is seen as a key commodity for the long term - some call it the oil of the future. It will play a critical role in the global economic development, as it will be used in vehicles, aircraft, ships, power generation, and heating systems for homes, buildings, trucks, trains, buses, among others.
"The international green hydrogen market is on the rise, and is being structured with the definition of a global regulatory framework," he said.
The research foresees the opportunity for green hydrogen to represent a direct investment of R$600 billion in Brazil over the next 25 years, so that the country has the capacity of electrolyzers - which capture green hydrogen - needed to produce hydrogen. Companies and the government are beginning to pay attention to the matter.
One example is Thyssenkrupp, which signed a contract with Unigel, a nitrogen fertilizer company, to supply electrolysis technology for a plant in the Camaçari industrial complex in Bahia. The project will receive an initial investment of $120 million and is expected to be completed by the end of this year.
Other companies in less advanced stages are studying the feasibility of plants are in the ports of Pecém, Açu, Suape, and Aratu. AES Brasil and Fortescue have signed a preliminary agreement with Pecém. Comerc, Casa dos Ventos, and TotalEnergies are following the same path.
Meanwhile, Chile has taken the lead in Latin America with the project of equipment manufacturer Siemens Energy and carmaker Porsche, which has begun producing synthetic, carbon-neutral fuels from hydrogen produced by wind power.
The war in Ukraine is accelerating the diversification of energy sources in Europe, and an upcoming auction by the German government could spur further investments. EDP inaugurated the first operational pilot plant in Brazil and is interested in participating; White Martins produced the first certified green hydrogen (H2V) in South America in Pernambuco.
But achieving production scale and economic viability remains a challenge. To be competitive in global markets, domestic green hydrogen prices must fall to $2 per kilo by 2025. Players are already competitive in renewable generation, but transmission and distribution costs must come down for that to happen. Mr. Costa also sees government support as key, through public policies such as tax exemptions.
"Brazil must create conditions to reduce the risks of investment projects in the country, namely: regulate the internal market, effectively tax carbon emissions - especially from industries that consume the most hydrogen - and/or grant financial, fiscal or other incentives to reduce production prices and actively support the production agents installed in the country to participate in international auctions for the purchase of green hydrogen and/or green products used for its transportation."
Because it is a nascent industry, the researcher says that the green hydrogen market is an emerging one at the global level, but one that is beginning to be structured by the definition of a regulatory framework that is also global. "Brazil must continue to be active in the definition of this regulatory framework, especially in terms of mechanisms and certification criteria," the researcher said.