Legal Framework for Low-carbon Hydrogen

In August 2024, the Legal Framework for Low-Carbon Hydrogen was established through Law 14.948/2024, with the active participation of the Ministry of Mines and Energy (MME) in drafting the text and guiding its passage through the National Congress.

The expansion of low-carbon hydrogen as both an energy source and an industrial input is considered fundamental to the energy transition and industrial decarbonization, within global efforts to reduce greenhouse gases and combat climate change.

MME estimates indicate that Brazil has the technical potential to produce 1.8 gigatons of low-carbon hydrogen per year, positioning the country as an important player in the global market.

Low-carbon hydrogen has broad applications, including the production of green fertilizers, refineries, steelmaking, and metallurgy. Several industries—such as cement, glass, mining, and steel—have incorporated hydrogen into their decarbonization strategies, in addition to its use as a fuel, particularly where direct electrification is not feasible.

The H₂ molecule has significant potential to reduce emissions in hard-to-abate sectors such as industry and transportation. Current projections place Brazil among the countries with the lowest production costs worldwide, reinforcing its potential in this segment and its leadership role in the energy transition.

The legal framework is a milestone for unlocking investments in Brazil’s energy transition, establishing the National Low-Carbon Hydrogen Policy, which includes the following instruments:

• National Hydrogen Program (PNH2) – Coordinated by the MME, with the participation of public and private institutions as well as academia, the program leads initiatives to encourage the use of low-carbon hydrogen as a key driver of the energy transition.

• Regulation – The framework establishes that activities related to the production, storage, transportation, and commercialization of hydrogen and its derivatives may be carried out by companies or consortia authorized by the National Agency of Petroleum, Natural Gas, and Biofuels (ANP).

• Brazilian Hydrogen Certification System – An accredited certification body will assess the emissions intensity of the production chain. The document will include details of the inputs used, production location, life-cycle information, and the amount of carbon dioxide equivalent emitted.

• Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro) – Provides tax reductions on investments, fostering technological and industrial development, competitiveness, and added value in national production chains.
• Low-Carbon Hydrogen Development Program (PHBC) – Offers an estimated R$18.3 billion in tax benefits over five years for the sector.

• Promotes technical and financial cooperation between the public and private sectors for research and development of new products, methods, processes, and technologies for low-carbon hydrogen production.

• Establishes legally defined tax, financial, credit, and regulatory incentives.

BENEFITS

Among the main benefits of establishing the Legal Framework for Low Carbon Hydrogen, the following stand out:

• Promotes development and generates more skilled jobs and income for families, fostering social inclusion

• Creates new opportunities for entrepreneurs in the production chain and ensures legal certainty for activities

• Facilitates access to financing

• Preserves the environment, promotes energy efficiency, and helps mitigate greenhouse gas (GHG) and pollutant emissions

• Attracts and stimulates domestic and foreign investment in production, marketing, transportation, and storage

• Promotes domestic production of nitrogen fertilizers from hydrogen to reduce dependence on imports and ensure food security

• Protects consumer interests regarding price, quality, and a stable, reliable supply of hydrogen

• Increases Brazilian exports

• Encourages research and development for energy and industrial purposes

THREE-YEAR PLAN

In August 2023, the PNH2 Three-Year Work Plan 2023–2025 was launched, comprising 65 hydrogen-related actions, 32 of which are already being implemented.

One of the actions is to increase annual investments in research, development, and innovation sevenfold, from R$29 million in 2020 to R$210 million per year by 2025.

By 2025, the goal is to deploy hydrogen pilot plants across all regions of the country. By 2030, the target is for Brazil to become the world’s most competitive producer of the molecule. By 2035, the vision is to consolidate hydrogen hubs, integrating production, storage, and transportation stages while linking them to different sectors of the economy.

Another priority action is expanding access to financing for the sector. US$35 million has been allocated for developing the hydrogen hub at the Port of Pecém, Ceará, with support from the Inter-American Development Bank (IDB) and the World Bank.

To date, more than R$290 billion in low-carbon hydrogen projects have been announced in 18 states, at different stages of implementation. These include research, development, and demonstration initiatives at pilot and industrial scale, currently under technical and economic feasibility analysis.

INVESTMENTS AND INITIATIVES

• The PNH2 Management Committee, coordinated by the MME, has been working on infra-legal regulations; a decree is in preparation.

• Public Call for Hydrogen Hubs in Brazil: selection of low-carbon hydrogen hub projects aimed at decarbonizing Brazilian industry. A total of 70 proposals were received nationwide. After expert analysis, 12 projects with the highest scores were identified. Final selection is underway for projects to be submitted to the Climate Investment Fund for Industrial Decarbonization.

• Brazil’s proposal for the Industry Decarbonization Program (IDP) of the Climate Investment Funds (CIF) ranked first among 26 eligible countries by an independent panel of experts. As a result, Brazil will receive R$1.4 billion in international funds for industrial decarbonization. The Expression of Interest (EoI) was submitted jointly by the Ministry of Development, Industry, Trade, and Services (MDIC), the Ministry of Finance, and the MME.

• The National Electric Energy Agency (ANEEL) issued a strategic call for financing R&D and innovation projects.

• The MDIC classified Fortescue’s project in the Pecém Export Processing Zone (EPZ).

• The MME and the Energy Research Company (EPE) are conducting transmission studies to support hydrogen projects in the Northeast, identifying opportunities for grid connection.

• Pecém Port Hydrogen Hub – Estimated at US$35 million in Ceará, financed through CIF-REI international funding and implemented by the World Bank.

ADDITIONAL PROJECTS ANNOUNCED IN BRAZIL

• Green Hydrogen Center (CH2V) – Located at the Federal University of Itajubá (MG), developed under the H2 Brasil project, a partnership between the MME and the German government.

• Green Hydrogen and Ammonia Plant in Piauí – Located in the Parnaíba Special Economic Zone (SEZ), with financial support from the European Union. The project is a partnership between Green Energy Park (GEP) and Solatio.

• H2Brazil – Located in Uberaba (MG), announced at the World Hydrogen 2025 Summit & Exhibition in Rotterdam, Netherlands. It is an international partnership between Brazil and Portugal, with support from the MME, the Ministry of Science, Technology, and Innovation (MCTI), ApexBrasil, and InvestMinas.

NUMBERS

IMPACT

• More than US$290 billion in announced low-carbon hydrogen projects across 18 states

• Sevenfold increase in annual investments in research, development, and innovation in the 2023-2025 Triennial Work Plan, rising from R$ 29 million in 2020 to R$ 210 million per year in 2025. The plan includes 65 actions, of which 32 are currently underway

• R$ 18.3 billion in tax benefits expected over five years from the Low-Carbon Hydrogen Development Program (PHBC)

• Brazil’s production potential: 1.8 gigatons of low-carbon hydrogen per year

DATES

• 08/02/2024 – Law No. 14,948/2024, establishing the Legal Framework for Low-Carbon Hydrogen, signed by President Luiz Inácio Lula da Silva

• 08/24/2023 – Launch of the 2023–2025 Triennial Work Plan of the National Hydrogen Program (PNH2)

• 09/27/2024 – Law No. 14,990, establishing the Low-Carbon Hydrogen Development Program (PHBC), signed into law

• 10/03/2024 – Launch of the Public Call for Hydrogen Hubs in Brazil by the Ministry of Mines and Energy

• 12/20/2024 – Preliminary results of the Public Call for Hydrogen Hubs in Brazil announced

• 03/13/2025 – Workshop on the Legal Framework for Low-Carbon Hydrogen, the Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro), and the Low-Carbon Hydrogen Development Program (PHBC)

• 09/22/2025 – MME launches the Brazilian Hydrogen Portal and expands transparency in energy policy.