The International Energy Agency report warns of the need to expand investment in infrastructure for storing and transporting renewable hydrogen

by Giuseppe Giamundo Neto and Joaquim Augusto Melo de Queiroz

The period leading up to the United Nations Climate Change Conference (COP) usually stirs up the national parliamentary agenda. 2023 was no exception. In the week before the COP, efforts intensified to secure approval in the Chamber of Deputies of bills associated with the so-called green agenda.

These proposals are part of the energy transition towards low-carbon economies. And extreme weather events resulting from global warming have sounded the alarm about the need for change. The city of São Paulo, for example, experienced violent heat waves in November 2023. Storms and gales battered the electricity distribution networks, bringing chaos to the population for days. The same happened in the city of Rio de Janeiro, hit by floods and deaths, with its population left without electricity. There is undeniable urgency to implement new public policies that address the climate challenge. And the corridors of the National Congress have echoed this perception.

After negotiations among party leaders, Bill (PL) No. 2308/2023 was approved by the Chamber of Deputies. In short, the bill aims to establish the legal framework for low-carbon hydrogen, popularly known as green (or renewable) hydrogen. The topic has been making headlines. And there are high expectations that it may foster new investments in this segment.

The recent memorandum of understanding signed between the German government and the state government of Piauí, aimed at setting up a large-scale renewable hydrogen production plant, illustrates this trend well. The news caused a stir because of the project’s impressive figures, even though it represents only a preliminary stage. There is a sense of a race against time. And it is accompanied by intense debates about the need for, and extent of, subsidies to consolidate this sector. Controversial issues, with fierce advocates for the various positions involved.

While the bill moves on to the Senate for review, a sensitive point deserves reflection: the need for investment in port infrastructure to develop projects of this magnitude. In recent years, negotiations for designing renewable hydrogen projects have multiplied. The Green Hydrogen Hub at the Port of Pecém Complex, in Ceará, stands out in this regard. This is because it benefits from a partnership with the Port of Rotterdam, and memoranda of understanding have already been signed. Projects at the Port of Açu, in Rio de Janeiro, also gained momentum with the agreements signed in 2023. The same is true of the Port of Suape Hub, in Pernambuco.

Despite the ongoing negotiations, the infrastructure of these ports will need to be modernized, especially considering the correlation between renewable hydrogen production and the development of the offshore wind industry. A technical study sponsored by the Brazilian Wind Energy Association (ABEEólica) indicates that the existing port network would not require the construction of new ports. In fact, works to improve the existing port infrastructure would be sufficient. Among them, the study highlights the creation of specific terminals dedicated to the offshore wind industry, the application of Industry 4.0 solutions to infrastructure and works for any necessary adaptations, given the size and weight of the cargo (see the performance of O&M services).

Although these issues affect the economic and financial feasibility analysis of this type of project, what stands out is the scarce discussion of the subject. The debate almost always focuses on whether or not subsidies should be established for renewable hydrogen production and offshore wind farms.

This is a time for attention. In a report released by the International Energy Agency (IEA) on January 11, it was signaled that renewable hydrogen production projects in Latin America are behind schedule. The situation is most critical in Chile and Brazil. And this scenario could mean a loss of competitiveness for Brazilian projects compared to more advanced projects in China. The IEA report also warns of the need to expand investment in infrastructure for storing and transporting renewable hydrogen.

There is therefore a fertile opportunity here to modernize the national port infrastructure. It is known that transporting renewable hydrogen represents a critical share of the cost basket for producing and marketing this energy input. A modern port infrastructure, capable of providing efficient management of this transport mode, may give the decisive boost to the competitiveness of its production in the country.

In this context, it would be advisable to design public policies attentive to this component of Brazilian port infrastructure. The construction industry would benefit from new project orders, the port industry from the modernization of its facilities, and the energy sector from lower renewable hydrogen production costs.

Article originally published in the Valor Econômico newspaper (in Portuguese), on 01.24.2024.