Brazil Turns Hydrogen Framework Into Operating Rules, Bringing Natural Hydrogen Into the Regulatory System

Brazil has taken a major step toward putting its low-carbon hydrogen ambitions into practice, publishing long-awaited regulations covering hydrogen production, certification, tax incentives and natural hydrogen exploration. 

President Luiz Inácio Lula da Silva signed Decree No. 13,096 on August 12, with publication following on August 13. The decree turns the country’s 2024 Low-Carbon Hydrogen Legal Framework and subsequent Low-Carbon Hydrogen Development Programme, or PHBC, into a more detailed operating regime after an extended implementation period. 

A central role will fall to Brazil’s National Agency of Petroleum, Natural Gas and Biofuels, or ANP, which will oversee hydrogen production authorisations alongside regulatory requirements covering certification, safety and access to government incentives. 

Existing hydrogen producers are also brought into the system. Operating facilities will generally have two years from publication of the decree to seek ANP authorisation, although exemptions are available for certain research projects and installations producing hydrogen for their own consumption, industrial feedstock or non-energy uses. 

Another major component is the creation of the Brazilian Hydrogen Certification System, or SBCH2, which will measure hydrogen according to lifecycle greenhouse-gas emissions rather than relying solely on production labels such as green, blue or grey hydrogen. 

Under Brazil’s existing legislation, low-carbon hydrogen must have lifecycle emissions of no more than 7kg CO2-equivalent per kilogram of hydrogen produced. 

Certificates will report the emissions intensity of hydrogen in kgCO2e/kgH2 and be recorded through a national registry intended to provide traceability and prevent double counting. The certification architecture divides responsibilities between the Coges-PNH2 hydrogen programme management committee, ANP, Inmetro and Brazil’s electricity-market chamber CCEE. 

The framework is particularly relevant to Brazil’s potential hydrogen-export industry, where the ability to demonstrate lifecycle emissions and compatibility with international certification requirements could become increasingly important. 

The decree also establishes detailed requirements for Rehidro, Brazil’s special tax-incentive regime for low-carbon hydrogen projects. 

Qualifying developers can receive suspension of PIS/Pasep and Cofins taxes on eligible new equipment, machinery, construction materials and services, with the suspension potentially converted into a zero tax rate once the required conditions have been met. 

Those benefits come with domestic-content requirements. 

Electrolysis projects must commit to at least 15% Brazilian content in hydrogen-production systems and electrolysers, while other hydrogen-production pathways face a 40% threshold. Distribution and transport systems and certain associated services face a 60% requirement, although exemptions may be available where suitable domestic equipment or manufacturing capacity does not exist. 

Companies seeking Rehidro benefits must also invest at least 1% of total project investment in research, development and innovation, plus another minimum 1% in sustainable energy-transition projects within Brazil. 

Beyond Rehidro, Brazil’s PHBC programme could eventually provide considerably larger support. 

Current legislation provides for up to R$18.3 billion (approximately US$3.53 billion) in competitive tax credits between 2030 and 2034, beginning with R$1.7 billion in 2030 and increasing to R$5 billion by 2034. 

The credits are designed to help bridge the cost difference between low-carbon hydrogen and conventional products, potentially covering up to 100% of the estimated gap. Lower-emission projects may receive more favourable treatment. 

Importantly, the programme prioritises hydrogen consumption in difficult-to-decarbonise sectors including fertilisers, steel, cement, chemicals, petrochemicals and heavy transport, with preference given to projects consuming hydrogen internally. 

That approach places part of the policy emphasis on creating actual industrial demand for low-carbon hydrogen rather than simply subsidising new production capacity. 

For the emerging natural hydrogen sector, however, one of the most significant developments is that geological hydrogen is now explicitly incorporated into Brazil’s regulatory system. 

Natural hydrogen exploration and production will operate through concession contracts regulated by the ANP. Within sedimentary basins, hydrogen may be included in oil-and-gas licensing rounds or added to existing petroleum concessions through contractual amendments. 

The ANP will also be able to establish simplified procedures for exploration outside sedimentary basins and regulate geological and geophysical surveys used to identify potential natural hydrogen resources. 

Its inclusion reinforces the technology-neutral nature of Brazil’s hydrogen framework. Renewable electrolysis may become a major component of the country’s industry, but low-carbon status is ultimately tied to lifecycle emissions rather than one prescribed production pathway. 

The regulations arrive as Brazil’s hydrogen project pipeline is already beginning to develop, including new projects targeting industrial applications, workforce development and integration with the country’s substantial renewable-energy resources. 

Full press release can be found here [EXTERNAL, PORTUGUESE].