Brazil studying tax benefit for hydrogen projects

Brazil is studying having hydrogen production plants included in the federal special regime of incentives for infrastructure development (Reidi), Henrique Cavalieri, coordinator of the hydrogen market opening and growth chamber of the mines and energy ministry (MME), told a webcast on Thursday. 

Currently, companies that have projects approved for the implementation of infrastructure works in the transportation, ports, energy, basic sanitation and irrigation sectors can be beneficiaries of Reidi.

The fiscal incentive involves the suspension of the Pis (1.65%) and Cofins (7.6%) taxes on equipment, services, instruments and materials used in construction works for projects. 

Also under study is allowing hydrogen projects to issue infrastructure debentures to have access to more competitive debt financing and potential points of improvement in export processing zones (known as ZPEs) to provide greater legal security and feasibility for the installation of plants. 

MME is also discussing the insertion of the hydrogen chain in carbon credit projects in Brazil’s voluntary and regulated markets. 

The studies are foreseen in the three-year national hydrogen plan on which the ministry is working.     

Other topics being addressed include the definition of low carbon hydrogen, the regulation of production and use of the fuel, the regulation of infrastructure for the handling and storage of hydrogen, the possibility of mixing hydrogen in the natural gas grid, development of human resources and scientific and technological support. 

Brazil has several green hydrogen projects subject to feasibility studies, mostly located in industrial and port complexes such as Suape, Pecém, Açu and Rio Grande, in Pernambuco, Ceará, Rio de Janeiro and Rio Grande do Sul states, respectively. 

They are mainly designed to use renewable energy from PV solar and onshore/offshore wind plants.