The Ministry of Economy informed today the outlines of the Bill on Hydrogen with low carbon emissions and other greenhouse gases, which will be sent to Congress in the coming weeks.
The Secretary of Energy, Flavia Royon, announced today that the project "completed its administrative circuit" and that "in the next few days it will be sent to the Presidency" for its consideration and signature, so she anticipated that its sanction will allow "giving the framework for this sector to develop".
Royon said that "this takes time, discussion and construction, because what we are discussing is not only what tax benefits are included in the law, but what we are discussing is what model of country we want, what model of development and that this law reflects that", he emphasized in an event in which the need to have an adequate legal framework was a recurring theme formulated by the speakers who took part in the different panels.
The initiative distributed by the Treasury Palace contemplates that for its classification "definitions and typologies by colors (green, blue and pink) are used, consistent with the internationally known nomenclatures regarding the energy source used to obtain it".
The types of hydrogen are defined under a technological criterion where green and pink correspond to its production from electrolysis of water from renewable and nuclear energy sources, respectively, while blue is from the reforming of natural gas including a carbon capture stage".
In the case of blue hydrogen, the project foresees that "the application authority defines, in the regulation, the maximum standards of greenhouse gas emissions per unit produced to be considered as such" and that "involve the use or transformation of fossil fuels and whose production process includes one or more stages of capture, and the storage or use of greenhouse gas emissions generated in its production in order to significantly reduce its release into the atmosphere".
In the elaboration of the project, the Guidelines for Energy Transition established by the Resolution of the Secretariat of Energy No. 1036/21, the Paris Agreement, the goals established in the NDC and the National Plan of Adaptation and Mitigation to Climate Change were taken into consideration.
In other words, "natural gas is used only as a transition, in a path of reduction of its use, which is consistent with the guidelines for energy transition outlined by the Secretariat of Energy. In this sense, the benefits and/or tax exemptions foreseen for the production of blue hydrogen are less than those corresponding to green hydrogen".
Further on, the initiative establishes "the creation of institutions for the certification of the origin of production, which will certify the characteristics of the hydrogen production process including the energy source and level of associated emissions, as well as establish safety standards for production. The local certifications will be in line with internationally recognized standards".
The bill contemplates "requirements oriented to the development of local suppliers in the hydrogen production chain and the consolidation of a national productive matrix that contributes to the generation of jobs linked to the sector. These requirements will increase over the years, depending on the estimated learning curve".
It also foresees certification and auditing mechanisms that penalize any hydrogen production project that, throughout its duration, exceeds the levels of greenhouse gas emissions declared at the time of submitting the Declaration of Inclusion to the promotion regime, or the maximum tolerable levels for its classification as blue hydrogen. In this sense, no potential gray hydrogen producer could be benefited by the proposed rule.
In order to maintain the benefits provided for in the law, research and development activities are required to be carried out in the national territory that are only related to the production of low-emission hydrogen and its vectors, whether they are carried out internally or in connection with national knowledge-intensive service providers, or in collaboration with national science and technology organizations.
Tax and financial benefits include accelerated amortization in Income Tax, accreditation and/or early refund of Value Added Tax, extension of the term for computing losses, deduction of the Financial Burden of Financial Liabilities, payment on account in Income Tax for an amount equivalent to 10% of the amount of the national component that was incorporated in excess of the established minimums, exemptions for importing goods (only for 10 years). In the case of the importation of new, unused merchandise, it must be previously accredited that there is no national production of the same or when there is not enough to satisfy the demand or such goods do not have the minimum required characteristics, the fiscal stability (the terms are limited according to the moment of adhesion to the Regime), the access to the Single Free Market of Changes (MULC).
In the same way, maximum percentage aliquots are established, measured in terms of FOB value per ton, which vary according to the type of hydrogen and the moment in which they are made. The 0% rate applies to exports made during the first 10 years of the law and for the type of green or pink hydrogen and its associated vectors.
Meanwhile, the suppliers of the chain will enjoy the exemption of tariffs with respect to the import of capital goods, production lines, parts and/or pieces -new in all cases-, destined to increase the national offer and the national integration of assemblies and subassemblies of the low emission hydrogen value chain, to the extent that they are destined to the projects promoted within the framework of the promotional regime of the law.