Brazil's southern state of Rio Grande do Sul is positioning itself as another Brazilian key player in the emerging green hydrogen market, with ambitious plans to develop local supply chains and attract significant investment, state officials and industry representatives said.
The "Conexão Indústria" (Industry Connection) program, a partnership between the state's industry federation (FIERGS), the state government, and investment promotion agency Investe RS, aims to foster economic development by strengthening local supply chains for new investments, particularly in green hydrogen.
Fabrício Forest, Investment and Commercial Promotion Director at Investe RS, highlighted the agency's role in this initiative. Created just over a year ago as part of the state's long-term development plan, Investe RS focuses on attracting investments, promoting trade, and enhancing the state's image.
A McKinsey study commissioned by the state government identified 10 high-potential areas for green hydrogen production within Rio Grande do Sul, considering factors such as proximity to wind farms, power plants, industrial hubs, ports, and transmission grids.
Projections for the green hydrogen industry in the state by 2040 include the creation of 41,000 jobs and an addition of R$62 billion (approximately $12.2 billion) to the state's GDP. Internal consumption of hydrogen is projected at 600,000 tonnes, indicating a strong domestic market for green ammonia, green methanol, and fuel for heavy transport, rather than solely relying on exports.
"The idea of the green hydrogen market, as shown by McKinsey, does not necessarily require us to export this green hydrogen for projects to be viable," Forest stated, emphasizing the significant local market potential.
In a tangible step towards realizing this potential, the state government last year launched a public tender offering up to R$30 million in subsidies for green hydrogen projects. Out of 16 proposals, four projects were selected as winners: Tramontina, Biate, Ambar, and Ambiental Plastic (Rodoplast). These projects are now moving forward with the effective production of green hydrogen in the state.
Alberto Machado, Executive Director for Oil, Gas, Energy, and Hydrogen at ABMAC, underscored the importance of developing a complete value chain within Brazil. "We have to ensure Brazil's autonomy in all aspects, not just in hydrogen production," Machado said, advocating for the generation of wealth, employment, and income through the export of equipment and technology.
Machado also noted the relevance of biomass as a route for hydrogen production in Brazil, potentially offering lower emissions depending on the electricity source. He highlighted that hydrogen in Brazil is seen more as an energy source for industry and a raw material for products like ammonia and urea, rather than primarily for electricity generation.
"The demand that already exists for hydrogen, currently produced from natural gas, is what will be replaced by green hydrogen, plus natural growth," Machado explained, projecting a four to five-fold increase in overall hydrogen demand.
Rio Grande do Sul is considered to be at the forefront of green hydrogen development in Brazil, with a robust environment of innovation, public policies, and incentive tools. "We are really a few steps ahead of most Brazilian states in terms of the environment for the production and exploration of green hydrogen," Forest concluded, pointing to ongoing construction and operationalization of plants in the state.
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