As global interest in renewable energy grows, Brazil is positioning itself as a key player in the low-carbon hydrogen sector. On August 2nd, 2024, Brazil passed Law 14948/2024, establishing the National Low-Carbon Hydrogen Policy as part of its broader National Energy Policy. This new legal framework, which includes the Brazilian Hydrogen Certification System (SBCH) and the Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro), seeks to encourage industrial and technological development, while providing tax incentives to foster competitiveness in this burgeoning sector.
At Aliant, we see significant business opportunities arising from this law, especially for companies and investors looking to enter or expand in Brazil’s energy market.
Key Provisions of the Law
The new legal framework defines low-carbon hydrogen and renewable hydrogen and establishes Brazil’s commitment to reducing greenhouse gas emissions in this sector. Specifically:
- Low-Carbon Hydrogen Definition: Low-carbon hydrogen is classified as fuel or industrial input produced with greenhouse gas emissions equal to or less than 7kgCO2eq/kgH2. This includes hydrogen from biomass, ethanol, biofuels, and electrolytic hydrogen generated using renewable energy.
- Rehydro Incentive Regime: Rehidro offers substantial tax benefits, including a five-year suspension of PIS/Pasep and Cofins taxes for qualified legal entities engaged in low-carbon hydrogen production. This incentive is designed to drive innovation and investment in the sector. Companies involved in packaging, storage, transportation, or distribution, as well as those generating renewable electricity for hydrogen production, can also qualify.
How Aliant Can Help
With offices across Brazil and other strategic locations, Aliant’s legal experts are ready to guide businesses through the complexities of Brazil’s new legal regulations. Our attorneys specialize in corporate and business law, offering tailored legal solutions that help companies navigate this complex framework and take advantage of the incentives available. Whether you are considering entering the hydrogen market or expanding your current operations, our team can assist with:
- Structuring Investments: Aliant’s corporate attorneys will help structure investment vehicles to maximize tax benefits under Rehydro, ensuring compliance with Brazilian tax regulations and international standards.
- Regulatory Compliance: Our team is well-versed in Brazil’s energy and environmental regulations, and we will work closely with businesses to ensure they meet all legal requirements, including obtaining the necessary certifications from the SBCH.
- Cross-Border Transactions: For multinational companies looking to invest in Brazil, our cross-border transaction experts will manage the legal complexities of establishing operations, securing distribution rights, and entering joint ventures in Brazil’s hydrogen sector.
Navigating the Regulatory Landscape
The Law grants the National Agency for Oil, Natural Gas, and Biofuels (ANP) the authority to regulate low-carbon hydrogen production, storage, and distribution. ANP, in collaboration with the National Electric Energy Agency (ANEEL), will oversee the development of regulations, using a regulatory sandbox approach to allow for innovative solutions in this emerging industry.
For businesses entering the hydrogen sector, understanding the regulatory requirements is crucial. Aliant’s legal team, with its deep expertise in energy and corporate law, will ensure that your business complies with ANP regulations, helping you avoid delays and penalties.
The Future of Low-Carbon Hydrogen in Brazil
Brazil’s new legal framework represents a significant opportunity for businesses to contribute to the global fight against climate change while capitalizing on an emerging market. At Aliant, we are uniquely positioned to assist companies in navigating the complexities of Brazil’s legal environment, taking full advantage of tax incentives, and ensuring regulatory compliance.
As the global transition toward renewable energy accelerates, businesses looking to invest in Brazil’s low-carbon hydrogen sector can rely on Aliant’s expertise to make informed decisions and capitalize on this growing industry..
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