Key players view Brazil’s Hydrogen potential

Brazil’s renewable energy generation market has expanded over the last six months through a series of agreements involving new green hydrogen plants.

A forerunner was Fortescue Future Industries (FFI), which in March inked an MoU with Porto do Açu Operações to build a 300MW green hydrogen plant at Açu port in Rio de Janeiro state.

Most deals, however, have been signed with northeastern states, which, besides having many wind and solar parks, are relatively close to the European and North American markets.

Australia’s Enegix, Brazil’s White Martins and France’s Qair have also signed MoUs with the Pecém Port, in Ceará. And the latter has signed an agreement with the Suape port in Pernambuco. Total capex is at least US$22bn.

BNamericas spoke with White Martins’ LNG and hydrogen director, Guilherme Ricci, and Enegix’s COO, Marco Stacke, about their plans and perspectives.

BNamericas: Why did White Martins sign an MoU with Ceará state?

Ricci: We belong to Linde, which is a pioneer in hydrogen production and distribution. We have been in Brazil for 109 years, with a strong local industrial presence.

We have an air gas plant [oxygen, nitrogen for medical and petrochemical purposes, for example] in Pecém. Therefore, we have nitrogen available there, which [in combination with hydrogen] is an important component to manufacture green ammonia.

Our project foresees the production of green hydrogen, its transformation into green ammonia and the export of this product to Europe, which already has more advanced protocols and laws for decarbonization goals.

And Ceará is a privileged region, with high solar irradiation and wind availability, making it possible to have access to a production chain with accessible costs.

BNamericas: Is White Martins also considering sourcing locally?

Ricci: The port requires the project to have a large percentage dedicated to export. However, something can be taken out for the domestic market, and there are customers in the region that will be able to use hydrogen.

As we already have several applications for the use of conventional, gray hydrogen, it would be very productive, at some point, to migrate to decarbonization from gray to green hydrogen. There is already demand in the country from some potential clients to understand the green hydrogen mechanism.

BNamericas: Could you provide some details on Pecém?

Ricci: We are evaluating land capacity, distance to utilities, potential for solar and wind energy, and energy cost, which will determine how much is manufactured.

Some equipment will be imported, and we are studying how we will internalize it in Brazil using free trade zones. So, talking about the size or value of the investments would be premature.

Editor’s note: A legal framework for export processing zones (ZPEs) was approved recently to boost port industrialization.

BNamericas: Where would you source the renewable energy for the hydrogen plant?

Ricci: Hydrogen will always be an ecosystem of companies. One [source] alone will not be able to dominate the chain. Since we signed the MoU in May, we have been approached by the largest renewable energy producers in the country, which already operate large parks in Ceará. So this will not be a problem for us.

BNamericas: Would the energy supply contracts resemble power purchase agreements (PPA)?

Ricci: We understand that it would be via PPAs. We had a round of talks with [mines and energy ministry] MME a few weeks ago. [The ministry is] already starting to write green hydrogen policies, studying potential benefits, whether or not there will be carbon taxation.

This will be very important to encourage these projects. The contractual model will depend on eventual benefits, the fiscal and tax model. In the world this varies.

BNamericas: What are the main challenges for the development of the hydrogen market in Brazil?

Ricci: We hope that throughout this year, at the latest in early 2022, following the example of what was done in Chile, [lawmakers] will be able to effectively define [the regulatory framework] to give more stability to the companies that are willing to invest. This will determine the speed of implementation of projects.

BNamericas: Does the signing of MoUs accelerate this regulatory work?

Ricci: Yes, [the authorities] are already feeling pushed. And there is pressure coming from the US, from Europe … it seems that São Paulo state is also defining decarbonization targets.

It is an inevitable path. Brazil has great renewable potential, and we have industry to absorb it. We are importers of ammonia, of fertilizers, we have a very large consumer park. Brazil has everything to be a player in this new fuel [market] of the future.

MARCO STACKE, ENEGIX

BNamericas: Why did Enegix sign an MoU with Ceará state?

Stacke: Ceará offers a unique mix of location, government support, port infrastructure, renewable energy potential and water availability.

To start Base One, a 3.4GW baseload green hydrogen production facility, in 2023, Enegix decided to start early with the feasibility study and permits to secure a first move advantage.

BNamericas: Where will Base One hydrogen be used?

Stacke: Some 99% of the 615,000t of hydrogen annually produced will be exported. Enegix will provide hydrogen for the local market to displace diesel baseload generation in isolated areas.

Hydrogen can generate energy 30% cheaper than diesel and it only emits water. Hydrogen can also be provided for mobility (ships, trains, trucks) very competitively and it will be competitive for cars, airplanes, helicopters, motorcycles soon.

Source: bnamericas.

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