Brazil has the potential to produce up to 1.8 billion tonnes of H2 a year at some of the lowest costs in the world, officials in Brasilia have said, with nearly 20% coming from projects supplied with power from offshore wind — despite the fact that there are currently no offshore wind projects located in the country.

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But experts have told Hydrogen Insight that the potential for hydrogen production may actually shore up the economics for offshore wind development in Brazil, and facilitate the sector's development there for the first time.

According to the government's Triennial Work Plan for hydrogen, published at the end of last week, it expects around 350 million tonnes per year of H2 production from offshore wind-generated electricity, with a further 6.9 million tonnes a year from nuclear.

But there are significant questions around whether these calculated potentials will ever be achieved, given that Brazil has no offshore wind farms built yet along its coastline and only one operational nuclear power plant.

“The figures that the Brazilian government shares… are the technical potential,” Aurora Energy Research’s country lead for Brazil, Bruno Silva tells Hydrogen Insight. “They are not really considering the market or actual competitiveness of this kind of production yet.”

However, Silva adds that hydrogen may actually enable offshore wind development, since there is little demand for extra renewable electricity at present.

“Brazil is actually oversupplied for electricity onshore,” he says, noting that in addition to strong hydropower in the mix from heavy rainfall over the past few years, there was a major buildout of solar PV capacity to meet a March 2022 deadline for projects to access subsidies.

Brazil aims to publish a regulatory framework for offshore wind by the end of this year in the hopes of progressing the roughly 183GW of projects currently under review for environmental licenses.

Green hydrogen could also present a stepping stone to decarbonise Brazil’s emissions that cannot be reduced directly by electrification — particularly since Silva estimates around 60% of the country’s greenhouse gases come from its agriculture industry and deforestation.

Brazil is predicted to consume around 45.2 million tonnes of fertilisers this year alone, most of which are produced using fossil gas, presenting a natural route for green hydrogen offtake.

But the work plan also suggests using H2 as a means of decarbonising transport, in particular in light-duty vehicles, either through fuel cells or as a feedstock in synthetic fuels.

Silva is sceptical that this will mean major incentives for H2 to fuel passenger cars.

“Brazil has a well-established ethanol programme,” he notes, referring to state mandates to blend the biofuel with gasoline and the rise of so-called flex-fuel cars that can run on pure ethanol.

Instead, given Brazil depends mainly on road freight over rail, Silva anticipates that these heavy-duty vehicles are more likely to require hydrogen than passenger cars, and would be a better fit for H2 use incentives.

The work plan also proposes a definition of “clean” hydrogen that only requires a cut of 50% scope 1 and 2 emissions compared to fossil equivalents, although it suggests this could be revised over time to 60% or 70% and to eventually cover scope 3 greenhouse gases (related to transport, storage and embedded carbon in equipment) as well.

However, it also specifies that the proposed standard would not prevent project developers from designing their plants based on stricter emissions requirements in potential export markets.

The EU has already made overtures to Brazil as a potential export partner, pledging €2bn ($2.2bn) towards clean hydrogen production and energy efficiency in the country through the European Commission’s Global Gateway fund.

Brazil’s government plans to raise its annual spending on hydrogen research nearly seven-fold, from R$29m ($5.9m) in 2020 to R$200m by 2025.

And it is also considering tax incentives for green H2 companies, although officials have warned that any subsidies would be unlikely to match those offered in the US or the EU.