It’s time to act. The power of low-carbon hydrogen in Brazil.

Rio de Janeiro, April 18, 2024 – Hydrogen produced from renewable and low-carbon sources plays a fundamental role in the global energy transition. The adoption of the so-called fuel of the future is a key element for mitigating the greenhouse effect and enabling the decarbonization of heavy industrial and transportation sectors, such as maritime and aviation, which cannot be directly electrified. To meet the climate targets set in the Paris Agreement, the use of low-carbon hydrogen is now a solution that seems inevitable.

In fact, the world is looking at this solution. A study by Deloitte Brazil indicates that, by 2050, more than $9 trillion will be invested in the global clean hydrogen supply chain to leverage the achievement of net zero. Of this total, about $3 trillion will be invested in developing economies.

In Latin America and the Caribbean, for example, the low-carbon hydrogen projects announced so far have the potential to increase the region’s production capacity to 3.5 million tons by 2030, with emphasis on the route that uses electrolysis with renewables. According to a report by the International Energy Agency (IEA), it is estimated that if all projects are indeed realized, this volume could reach 6 million tons, representing 15% of the global announced projects.

Thanks to its exceptional natural resources, including onshore and offshore solar and wind, Brazil offers enormous potential for the production of hydrogen generated from renewable sources. Electricity accounts for 60% of the production cost of low-carbon hydrogen, and Brazil has the advantage of having a power grid with access to competitively priced clean energy sources. This makes Brazil one of the most competitive countries in the world for producing low-carbon hydrogen. And this competitive potential is not limited to hydrogen but extends to all sectors that consume the molecule to produce the so-called “hydrogen derivatives.”

In the Brazilian industry, the application of low-carbon hydrogen can be quite varied, as in addition to being directly used for generating electric or thermal energy, it is also used for producing chemicals or synthetic fuels and for industrial or mobility purposes. Sectors such as metallurgy, steel, ceramics, glass, and cement also have potential for its application, as they consume natural gas and coal, including vegetal coal, in combustion processes in furnaces and heaters.

The development and deployment of technologies for new end uses of low-carbon hydrogen—including applications in hard-to-decarbonize sectors, such as transportation—must occur in parallel with specific financing lines and carbon pricing offers, which will drive hydrogen production in the country. Therefore, investing to encourage domestic production and meet Brazilian demand could be the key to reindustrialization and Brazil’s integration into the new global economy based on the transition to low carbon.

In December 2023, the Ministry of Mines and Energy (MME) participated in the High-Level Hydrogen Roundtable at COP28 in Dubai and signed two declarations aimed at positioning Brazil in the international hydrogen market. The first aims to standardize hydrogen certification systems, and the second proposes public and private actions to develop this market. Thiago Barral of the Ministry of Mines and Energy highlighted at the event: “We have the potential to produce 5% of all the world’s demand for low-carbon hydrogen in the next decade.”

Among the Brazilian states, Ceará has the highest number of planned projects, with more than 30 memorandums of understanding signed with national and foreign companies, signaling investments exceeding $30 billion (R$145.7 billion). Of these, there are four pre-contracts already signed, with an investment forecast of $10 billion (R$48.5 billion). In addition, the Northeast as a whole has great potential to produce low-carbon hydrogen in volumes higher than Brazil can consume. This condition transforms the country into an exporter of the fuel, as well as promoting an even cleaner energy matrix for the national industry.

With this scenario in view, it can be said that Brazil has the capacity to promptly initiate the first low-carbon hydrogen production projects. However, some challenges still need to be addressed. One of them, for example, is that the molecule still has a relatively high cost compared to other technologies or energy options. According to preliminary calculations, producing one kilogram of low-carbon hydrogen in Brazil would cost between $4 and $8. However, to be competitive with hydrogen from fossil sources, this cost would need to drop to $1.5 to $2.

Yes, low-carbon hydrogen is not perfect and has its complexities and risks, but today it offers a partial response to our global warming problem. Therefore, it is urgent to organize the cessation of financing and subsidies for coal and oil and redirect them to solutions that can decarbonize hard-to-reduce emission sectors and transportation. We cannot wait any longer, as, according to Climate Reanalyzer, 2023 was the hottest year on record since temperature measurements began.

By 2030, Brazil is expected to establish itself as a major producer of low-carbon hydrogen. EDF Renewables Brazil assumes its crucial role in this journey, committing to contributing to achieving this goal. Together, we will build a better future.

*Sylvain Jouhanneau is the Director of Emerging Businesses at EDF Renewables Brazil

About EDF Renewables:

EDF Renewables is a global energy company that develops, constructs, and operates renewable energy generation plants. A key player in the energy transition worldwide, EDF Renewables implements competitive, responsible projects within the EDF Group, generating value. In all the countries where it operates, our teams are committed daily to local stakeholders, combining their expertise and innovation capacity to combat climate change. By the end of 2023, EDF Renewables operated a net installed capacity of wind and solar projects equivalent to 12.8 GW worldwide. Primarily present in Europe and North America, EDF Renewables continues to grow and position itself in promising markets such as Brazil, China, India, South Africa, and the Middle East. Despite its strong involvement in onshore wind and photovoltaic solar, the company also operates in offshore and floating wind, as well as in new technologies such as energy storage, floating solar, and agrivoltaics. In Brazil since 2015, EDF Renewables Brazil is an important player in the renewable energy sector, totaling over 1.8 GW in viable solar and wind energy projects in Bahia, Minas Gerais, and Paraíba.