The National Hydrogen Program And The Regulation (or Not) Of Hydrogen In Brazil

• Published date: 14 March 2022
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Renewables
• Law Firm: Tauil & Chequer
• Author: Mr Paulo Rage

The global energy landscape and climate change have put new pressure on the economy to decarbonize. Thus, renewable energy sources and inputs have been sought for a wide variety of industries and consumer markets. In this scenario of energy transition, hydrogen has been gaining importance as a potential new key element. Hydrogen has the physicochemical characteristics that allow it to become both an energy source and a renewable and non-polluting input with many practical purposes. It can be used directly as an energy source in the automotive, aerospace, and power generation industries. It can also be used as an input in several industrial segments-steel, food, chemical, mineral, cement, petrochemical, fertilizer, technological, among others.

Number 1 on the periodic table, hydrogen (H) is the most abundant chemical element in nature, constituting approximately 75% of the elemental mass of the universe,¹ and can be obtained in a variety of ways. Depending on how hydrogen is obtained (and its polluting degree), it can be classified by colors, the main ones being gray, white, blue or green. Green hydrogen, in particular, has received a lot of attention and investment from the market, as it is a renewable energy source that can be used in the whole production chain, from the initial generation of renewable electric energy to the water electrolysis process that leads to hydrogen production. However, green hydrogen's cost is still very high when compared to its non-renewable alternatives, whether as an input for other industries or as an energy source. Therefore, it is crucial that the entire hydrogen industry be open to investment in research and development. It is also fundamental that its market be open to free competition, which would spur innovation in the market to provide the economy of scale and technological evolution needed to increase its productivity and, consequently, decrease its cost.

In this setting, the National Hydrogen Program (PNH)² was published by the Ministry of Mines and Energy (MME) in July 2021. Its purpose is to "develop and consolidate the hydrogen market in Brazil, as well as promote the international introduction of the Country on an economically competitive basis." Among its objectives, the PNH lists these related to a "Legal and Regulatory-Normative Framework":

"Analyze the existing national laws and regulations to subsidize the inclusion of Hydrogen as an energy vector and fuel in the Brazilian energy matrix. Promote the regulation, through governmental agencies, of the production, transport, quality, storage and use of hydrogen and its technologies by:

1. Analyzing the existing authorities of regulatory agencies competent bodies or entities, as well as new needs;
2. Assessing the need for proposing regulations on new technologies at the three levels (federal, state and municipal);
3. Observing that regulation should remain open to market conditions and avoid barriers and technological lock-in;
4. Evaluating interrelations between sectors and proposing harmonization;
5. Seeking to develop and establish codes, norms and standards issued by national institutions in line with international rules;
6. Promoting cooperation among governmental agencies for the regulation of hydrogen, considering its multiple sources and uses seeking regulatory harmonization, citing as an example the transportation of hydrogen mixed with natural gas;
7. Evaluating the need to propose...