Hydrogen advances and players wait for regulation in Brazil

0 minutos de leitura

Henrique Faerman, from agência CanalEnergia

Considered for its chemical versatility and high reactivity, hydrogen is a light gas with very high calorific power utilized in some industrial processes, such as for obtaining ammonia fertilizer, but which also currently emerges as an energy vector and the missing chain for decarbonization of the world economies post Paris Agreement, being even able to replace petroleum and natural gas by 2050, according to estimates from experts.

H₂, the most abundant element in the universe, is rare to find on Earth in its natural state, being industrially produced from hydrocarbons present on natural gas, such as methane, configuring what is known as gray or blue hydrogen, depending on the capture and later utilization of the emitted carbon dioxide, which can result in a 85% reduction in the number of emissions in comparison to mineral coal.

Another alternative for obtaining it is by means of water electrolysis, a process with higher costs but that, when associated to renewable energies, culminates in a production without emission of pollutants into the atmosphere, something new to the market and which is now named as Green Hydrogen (H₂V), a trend seen in the international scenario as the dominant long-term solution.

The great asset is that the molecule can be stored for conversion into electricity, fuel or for carbon capture and recycling, working as a real coupler between different markets, such as the gas and energy ones, by means of several applications in the transportation, industrial and residential areas.

Despite these advantages, the low density of the gas makes its storage and transportation difficult, representing current challenges for its usage as an universal energy vector, besides the prices for the electrolysers for large-scale use, which could be lessened with standardization and mass manufacturing of the batteries utilized in these equipments, as a report from the International Renewable Energy Agency points out.

Data from last year’s Hydrogen Council indicate that the production and export of the input should account, in 2050, for 20% of the entire global demand for energy, generating a US$ 2.5 trillion market and 30 million direct and indirect jobs all around the world. Because approximately 85% of Brazil’s energy matrix is sustainable, the country may become one of the great protagonists in this market, also considering that it has the smaller clean generation cost in the world.

European demand

One of the first opportunities comes from Germany, a country with few renewable resources, which has announced a € 10 billion plan aiming at partnerships for the development of technologies related to hydrogen and which supports the commitment to decarbonize its energy matrix for the next 30 years, even foreseeing the holding of auctions for H₂V purchase from other countries.

In an interview to Agência CanalEnergia, the Manager of Innovation and Sustainability of the Brazil-Germany Chamber of Rio de Janeiro, Ansgar Pinkowski, said that the subject has been worked on between the two countries and now the efforts were intensified with the new German plan, concerned to help the nations that have renewable matrices to become producers and exporters of this commodity. “With plenty of sunlight, wind and biomass, Brazil has excellent conditions to develop an economy based on green hydrogen and we are already working to promote the subject to companies and industrial associations, helping the private initiative and even the governments in some Brazilian states to ride this wave”.

With this goal in mind, the German Chambers of Rio de Janeiro and of São Paulo are creating task forces to discuss, in intragovernmental meetings, what are the hindrances and what is necessary for this industry to take off here, as well as what proposals will be made to the governments regarding regulation, technical standards to be developed or legislations to be updated, and, if possible, to begin developing pilot-scale projects.

“We are at square one and in order to encourage a more concrete dialogue we will create these teams to work in the production, distribution and applications fronts”, the director of Companies Internationalization and Business Development of the Brazil-Germany Chamber of São Paulo, Alessandro Colucci, states.

According to him, there are few H₂V projects nowadays because there is still a considerable price gap when compared to gray and blue hydrogen, a gap which should decrease over the years with the help of international incentives, as in the case of long-term German competitions and probably from other European Union countries to come, especially France, Portugal and Spain.

In the assessment of senior researcher at Gesel, Maurício Moszkowicz, among all existing energy vectors, H₂ will be fundamental mainly due to the issue of the intermittence of wind, solar and even water energy sources, being able to act in the storage of this energy in times when there is no demand, especially because the construction of new hydroelectric reservoirs is no longer viable nowadays.

“At first we need to articulate this new market, creating experiences and knowledge for the emerging environment, so that later we can start the large-scale projects and develop the internal market”, he comments, pointing out that Gesel works with three projects in the portfolio within the context to generate knowledge with the bias of practical application.

“Using ethanol to transport H₂ is very interesting even in order to develop technologies that can be exported.” Ansgar, from the Brazil-Germany Chamber

The studies are concentrated on infrastructure and development of analysis platforms to understand how the market will position itself in several scales, besides evaluating geographic potentials, pre-salt gas reserves and several potentials for the H₂ economy beyond exports, such as in the production of ammonia, an item currently imported on a considerable scale by the country.

For Ansgar, Brazil’s path is to position itself as a strategic country in the H₂V export and to support the internal market through biomass, as it has an advanced technology and infrastructure for ethanol, which is nothing more than “a hydrogen hull” and which can create the 100% clean car from a fuel cell that is converted into electricity, with the advantage that this system weighs much less than batteries.

“Using ethanol to transport H₂ is a very interesting matter, even for developing technologies that can be exported later”, he stresses, stating that the country needs to give clear signs that it wants to invest on this economy and to carry out international marketing to attract more companies.

Ceará takes the lead

While the movement heats up in Germany, some international companies from the gas chain showed interest in developing projects in Brazil from this year onward, signing memoranda of understanding to evaluate the construction of plants for H₂ production and export or solutions from the Port of Pecém (CE), in the case of Australian companies Enegix, White Martins, Fortescue and more recently of Qair Brasil, the latter two also analyzing the Port of Suape (PE), as well as Neoenergia.

“We intend to launch a green hydrogen export project with great growth potential for local companies, making the most of the synergies that Ceará provides from the plant of air gases that we have in”, the director of Green Hydrogen and Natural Gas of White Martins, Guilherme Ricci, told Agência CanalEnergia, adding that he sees electrical mobility as one of the levers for H₂V usage in the country, decarbonizing long-haul bus and truck fleets.

According to him, the company’s goal is to take part in other opportunities in Brazil, believing that the future demand will be great enough to support several projects. “In this first period, we carry out preliminary engineering assessments, such as capacity, utilities, area, among others under analysis”, he completes.

Considered as the first hydrogen hub in formation in the country, the port in Ceará has considerable competitive advantages, such as being closer to the international markets, having sea routes 12 days away from the Port of Rotterdam, which owns 30% of Pecém and where the future flow of H₂V in Europe will take place.

The site also has a tax-free zone and a 200-hectare area reserved for players interested in setting up their technology parks, the Special Processing Zone (ZPE), which will bring savings of 30% to 40% with OPEX and CAPEX for investors and tax benefits with the Incentive Program for the Renewable Energy Production Chain (Pier).

The idea, according to the state government, is for the Industrial and Port Complex to house a complex production chain, including a desalination plant capable of electrolyzing 5 GW and generating 900 thousand tons of H₂V.

Furthermore, the state has one of the main wind and solar potentials in the country, totaling 991 GW among photovoltaic plants, onshore/offshore wind farms and hybrid projects, with the data available in informative publications, the so-called Atlas, that facilitate the understanding and analysis for entrepreneurs.

“Brazil is closer to Europe and it has a diversified industrial base, renewable energy matrix and waters with no channels or international disputes for navigation compared to other countries that are also positioning themselves in this race, such as Chile and Australia”, the president of the Sectoral Chamber for Renewable Energies of Ceará, Jurandir Picanço, highlights, adding that the second step are the more operational memoranda, aiming to establish the occupations.

According to Picanço, who is also an advisor in Energy for the Federation of Industries of the State of Ceará (Fiec), the work at the moment falls into the training of professionals for the entire hydrogen process, with the Federation having already prepared a framework for this knowledge, including carrying out pilot projects and supplying H₂ to Japan, in order to assess the critical transport factor of the molecule.

“We are studying possibilities to export it in the form of ammonia and alternatives to find the most compatible one to the market, which at the moment is the compressed H₂ one”, he points out, highlighting that the hub already gathers more than US$ 14 billion in planned investments.

Less noise, more strategy

As for the absence of German companies in these memoranda involving the port regions, as is also the case in Port of Açu (RJ), Ansgar Pinkowski recalls that the country’s culture is to “think more and then enter the business already knowing what to do”, mentioning that many companies are responsible for supplying the equipment for the production of H₂V, such as Thyssenkrupp, Linde, which recently bought White Martins, as well as Siemens, which prepares its entire portfolio for decarbonization.

“Our strategy is to follow the movement of customers and provide the appropriate solutions, whether hydrogen or derivatives such as ammonia, green gasoline, among other possibilities, while we review the feasibility of projects and the cost of H₂V for possible applications”, the Siemens Energy representative in charge of the Hub in Latin America, Andreas Eisfelder, says.

He tells that the company still doesn’t have plans to build hydrogen plants on Brazilian soil, analyzing the opportunities to implement a more complete project, something that should appear later on.

“I really like to see how the H₂V ecosystem is happening in Brazil, I arrived here in November last year and I am surprised by the passion that the energy and chemical sectors have to receive these possibilities from this vector”, Andreas comments.

“Follow the clients and provide appropriate solutions in hydrogen or derivatives such as ammonia and green gasoline.” Andreas, from Siemens Energy

This year, Siemens’s new energy restructuring signed an agreement with Eletrobras and Cepel for the allocation of an electrolyser within the value chain, analyzing the concept of coupling sectors. “It’s a new technology that needs well-defined and consistent regulation to ensure that our solution fits well into the Brazilian context”, he explains.

A major milestone for the company was the launch of the Silyzer 300 electrolyser, in the order of 17 MW, three years ago. Siemens Gamesa, another division of the former holding company, also announced a project in 2021, but to produce low-cost green hydrogen from wind energy.

In Andreas’s view, no country is more advanced than Brazil, as the industrial transportation of H₂V is a new process for any nation. The expectation is that the Brazilian government will bring a point of reference and responsibilities, establishing authorities to dialogue on any issue that remains open.

“You have to define who is responsible for authorizing a plant installation and for being responsible for regulating this new energy vector. Actors need to know who they are going to talk to on regulatory issues”, he considers.

The issue of legal security for large long-term investments is a keynote of all sources heard by the article. For the Brazilian Hytron, created 30 years ago in a laboratory from Unicamp and which works on all fronts of the business with solutions and equipment for those who want to enter the H₂ economy, it is necessary that the government also thinks about some incentives to develop the market. “Perhaps something with limited time of 10 to 15 years and benefits compared to other fossil fuels, which will further motivate investors”, the company’s CEO, Marcelo Veneroso, states; he has been meeting with different players, including the MME, suggesting contributions from the country to give more scale to this market.

“We requested that the government allocates resources to start real projects, with a commercial character and interesting nationalization rates, honoring those who are already in Brazil with the technology. It is the embryo that can become a showcase in the world”, he analyzes.

Another point raised at the meetings is that the national program for the vector must bring benefits to society as a whole, including the industry, in the sense that the production, equipment and technology of H₂ is completely dominated by the country.

“It is a window of opportunity that is being created. At the time of petroleum and gas, an atmosphere was created in which everything would be done here but we lost that chance by importing everything, which we cannot let happen with hydrogen”, Marcelo recalls.

Over nearly two decades of research, Hytron has developed hydrogen production systems from renewable inputs inside a container, in modules that can reach up to 5 MW in order to facilitate transportation, and which can be installed in fuel distribution stations to produce H₂ locally from ethanol, for example, one of the stars of the company in Brazil.

“We are able to generate hydrogen from biomethane, natural gas, sugarcane, corn, among other inputs by means of reformers, creating synthetic fuels and developing any process that the client needs”, the executive points out.

“The benefits compared to other fossil fuels will motivate investors even more.” Marcelo Veneroso, from Hytron

Another utilized generation technology comes from alkaline electrolysers, in which the electrolyte corresponds to an aqueous solution of Potassium Hydroxide (KOH), but PEM (Proton Exchange Membrane) is the big bet for the coming years, where the electrolyte corresponds to a conductor solid ionic, usually in the form of a polymeric membrane, with its cost now approaching the one for alkaline electrolysers, but with several advantages.

For Veneroso, the company’s differential is to act on all fronts of the hydrogen value chain, which last year aroused the interest of the German group Neuman & Esser (NEA), one of the world leaders in the manufacture of piston and diaphragm compressors, that ended up acquiring the company to expand its portfolio, which foresees € 30 million in a H₂ manufacturing unit in Germany.

“It’s hard to find a single player that makes electrolyser, reformer and PSA (Pressure Swing Adsorption). We are able to make hydrogen with the highest degrees of purity, such as for the vehicle sector”, the executive defines, informing advances in a project for producing synthetic diesel oil for aviation and in a prototype for producing H₂ from solid oxide.

According to the Brazil-Germany Chamber of Commerce and Industry, the acquisition of Hytron corroborates the movement in which 60% of German companies working in the development of H₂V have subsidiaries in Brazil and 95% of the global companies also have subsidiaries in the country, which may mean advanced access to technology on the subject, only being necessary to work in demands in the domestic market.

What is Brazil’s plan?

Here, hydrogen is one of the seven priority Research and Development themes regulated by Aneel, according to guidelines from the National Council for Energy Policy (CNPE), which also approved the creation of a national program for the vector, with participation of the Ministries of Science and Technology, Regional Development and Mines and Energy, in addition to the Energy Research Office (EPE).

“It will be something more like the modernization of the electricity sector, a regulatory, technological and market map with issues that we have to develop and respond to over time”, the Head of the Special Advisory on Regulatory Affairs of MME, Agnes da Costa, explains.

The plan should be launched in at least a year, with guidelines expected to be announced in July. Earlier this year, EPE released a technical note indicating the need to consolidate and formalize a national rainbow strategy, covering all opportunities for developing the use of H₂ without being limited to the green type, which would accelerate the formation of markets.

“The Brazilian government wants to leave all possibilities of generating the input open to develop the domestic market, which is understandable considering all investments in oil and gas and the country’s economic situation in the face of the pandemic”, Ansgar Pinkowski says.

He recalls that in the future there will be a labeling of hydrogen for its commercialization and the private market is where it will be defined which color will prevail, which points to green hydrogen and to internationally accredited certificates to prove its origin.

As for the MME representative, there is no electrification narrative that is valid for everyone, like the dominant European one, with each country having to assess its competitive advantages and the best routes. “The idea is to scale up the market with the most competitive hydrogens that exist and that the world will naturally transition to the cleanest one”, she assesses.

“Our work will be to enable private investments and to create clear rules and favorable environments.” Agnes, from MME

The government’s responsibility would be to look at regulatory gaps and technical specifications in order to check what are the pending issues to engage the use of the molecule as an energy source. For this reason, the government is open to suggestions and ways to decide what steps to take, having scheduled a meeting with the private sector for the first week of July.

“We can’t restrict business models even due to the issue of technological neutrality; the companies have to present their projects and then we say if it fits within the sector’s standards”, Agnes sustains, adding that apparently the standards for gas and energy accommodate H₂ as an energy source as in the case for technical specifications of the pipelines evaluated in the gas market, for example.

However, she admits that there is still a vagueness in the issue of H₂V projects that need environmental licensing, whether such competence would fall to Ibama or the state agency, as well as whether a grant from the National Water and Sanitation Agency (ANA) will be needed for the use of water resources in the electrolysis process, especially in an environment of water crisis.

“What we have been defending is that we have to take advantage of the opportunity and gather the knowledge that exists in the sector. Our job will be to enable private investments and to create clear rules and favorable environments”, she summarizes.

According to Agnes, the government won’t allocate resources on a technology that is still expensive, which doesn’t prevent the states and the Investment Partnership Program (PPI) from formalizing agreements with the support of the Federation’s expertise, as in the privatization processes of state-owned companies.

“We cannot be left behind and we will channel whatever is interesting to Brazil”, she assures, aiming at the development of a competitive market without subsidies and through cooperation and synergies with other countries, citing advanced conversations with the International Development Bank (IDB), United Kingdom, Colombia and Denmark, the latter in negotiations for a memorandum of understanding.

“Create a tax on carbon emissions, transforming the process into competitiveness.” Jurandir Picanço, from FIEC

Another highlight confirmed by the Head of the Special Advisory on Regulatory Affairs of MME is the launch of a strategic call from Aneel and ANP by the end of next year to start receiving projects in 2023, similarly to what happened with electric mobility in 2019. One of the interesting projects within the program involving the electricity sector is one by Furnas at the Itumbiara HPP, with the company producing H₂ for the first time in 64 years of history.

In addition to R&D, the government works to generate more knowledge on the subject and one of the points involved is human training, having recently met with the Ministry of Education to identify gaps and suggest ideas for training new professionals, whether operational or linked to the disruptive innovation process.

One of them is to create the “Hidrogênio + Brasil” (“Hydrogen + Brazil”) platform, with a portal on the Internet where all data and information on the subject will be available to investors and consumers, generating a knowledge that is currently very disperse. A similar initiative was launched by the Brazil-Germany Chamber, in partnership with Gesel.

In researcher Maurício Moszkowicz’s opinion, it is necessary to support the development of experiences both in the academic and industrial fields, with the position of BNDES, FINEP and other financing companies being of capital importance, as well as the role of certifying entities.

“Our hydrogen will have to be certified to have value and attractiveness in the external market”, Maurício Moszkowicz, Senior Researcher at Gesel, emphasizes.

Jurandir Picanço, from Fiec, points that that the government’s new plan must present some privileges for H₂V, such as public policies that speed up processes until these new technologies become competitive, the same way it did with wind and solar sources.

“The easiest way would be to create a tax for carbon emissions, transforming the process into competitivity”, he highlights, noting that other countries have already established policies that practically force the transformation of industry, mobility and energy production and that without measures of this magnitude it will be difficult to develop a market with costs that are still very high.

Finally, Marcelo Veneroso, from Hytron, ponders that the H₂V needs to become viable in its time and that there are still very large assets still based in fossil fuels, the most intelligent strategy being to open the focus and start the transition with the use of H₂, even if it’s not the green one.

The agricultural machines are an example, most of them working powered by diesel oil nowadays. “With synthetic diesel oil you replace the current fuel for the machines by using blue H₂ with the same asset base without doing large-scale technological changes, reducing emissions by at least 80%”, he concludes.