The rapporteur of bill PL 2308/2023, Bacelar (PV/BA), has opted to exclude the package of subsidies and incentives originally earmarked for low-carbon hydrogen production. This decision, made in consultation with the economic team, reflects a complex interplay of political and economic considerations within the Brazilian legislative landscape.
The initial proposal in the Chamber of Deputies outlined a comprehensive strategy, including a specific investment relief regime and discounts on charges for renewable energy used in hydrogen production. Notably, there was contemplation of creating a unique energy auction tailored for these projects. The objective was to leverage renewable generation with flow restrictions and introduce a quota in capacity reserve auctions specifically designated for hydrogen initiatives.
Tax incentives formed a crucial aspect of the proposed legislation. The rapporteur, Bacelar, emphasized that consensus had been reached with the government regarding these incentives. The plan also considered the initiation of energy auctions dedicated to hydrogen projects, marking an innovative approach to project funding and implementation.
The removal of subsidies raises questions about the future trajectory of Brazil’s hydrogen sector. While tax incentives remain a focal point, the absence of a dedicated subsidy package may impact the competitiveness and viability of low-carbon hydrogen projects. Balancing the interests of various stakeholders and ensuring a sustainable energy transition pose significant challenges.