4.1 Introduction
Hydrogen is anticipated to play a central role in the global energy transition towards decarbonized economies.Footnote 1 With demand for clean hydrogenFootnote 2 projected to surge in the coming decades, particularly in Europe and north-east Asia,Footnote 3 Latin America finds itself well positioned to capitalize on this market opportunity.Footnote 4 With its vast energy resources, both proven and untapped, the region has the potential to become a production epicentre in the impending hydrogen economy.Footnote 5 This ability to produce large quantities of low-cost clean hydrogen and its derivatives can not only catalyse new export sectors for many Latin American countries; it can also contribute to their domestic decarbonization efforts.Footnote 6 Indeed, hydrogen’s versatility as an energy carrier, storage medium and industrial feedstock makes it a vital component in addressing the challenges of hard-to-abate sectors like heavy industry and heavy-duty transport.Footnote 7
This chapter examines the emerging policy and regulatory frameworks for hydrogen in Latin America by focusing on three regional leaders, Chile, Colombia and Brazil.Footnote 8 These countries, endowed with solar, wind, hydro and/or fossil fuel assets, all aim to become major clean hydrogen producers. To achieve this vision, they have each outlined ambitious hydrogen strategies, setting the stage for the industry’s growth.Footnote 9 In order to keep pace with the increasing interest from policymakers and the private sector, their legal regimes are undergoing a period of significant transformation to scale the hydrogen value chain beyond scattered pilots. While Chile, Colombia and Brazil have made positive strides, as this chapter explores, critical regulatory challenges must be addressed before this promise of a thriving regional hydrogen market can fully materialize.
As a note to the reader, in view of the rapidly evolving nature of the hydrogen legal landscape, the information presented in this chapter is current as of 15 June 2024, unless otherwise noted.
4.2 From Promise to Policy: Parallel Ambitions, Divergent Approaches
Seeking to harness clean hydrogen’s power, Chile, Colombia and Brazil have each articulated important policy documents reflective of their ambitions. These documents, while providing insights into their strategic priorities and approaches to hydrogen development, also serve as the foundation for shaping their regulatory environments. In this regard, to properly contextualize the following regulatory discussions, this section will briefly explore some salient aspects of these policy initiatives.
4.2.1 Kickstarting the Hydrogen Endeavour
Chile’s foray into hydrogen has been a comparatively recent affair, largely motivated by studies that highlighted the country’s immense renewable potential.Footnote 10 Against this backdrop, swift decision-making coupled with international collaborations, notably with Germany,Footnote 11 led Chile to publish its National Green Hydrogen Strategy in 2020, the first of its kind in Latin America.Footnote 12 More recently, Chile released its Green Hydrogen Action Plan 2023–2030,Footnote 13 intended to serve as the actionable roadmap for the industry’s development for the remainder of the decade.Footnote 14
Colombia, for its part, saw potential in hydrogen as early as 2007, recognizing its capacity to transform the transportation sector.Footnote 15 Nonetheless, this interest only matured into a concrete plan with the publication of its Hydrogen Roadmap in 2021, under which the country similarly aims to exploit its natural resources for clean hydrogen production.Footnote 16 Unlike Chile’s two-pronged approach, Colombia’s Roadmap includes the several lines of work on which the different national and regional bodies will work over the current decade.Footnote 17
As for Brazil, its hydrogen endeavour can be traced back to at least the 1990s, with early initiatives focused on exploring hydrogen’s energy applications.Footnote 18 However, it was only in 2022 that these initiatives fully crystallized with the establishment of its National Hydrogen Programme.Footnote 19 As part of this programme, Brazil published its 2023–2025 Three-Year Work Plan, the country’s short-term blueprint for its hydrogen ambitions.Footnote 20 Like its neighbours, it also plans on capitalizing on its extensive natural assets to become a major hydrogen producer.Footnote 21
This overview reveals a unified vision amongst Chile, Colombia and Brazil to tap their natural resources for clean hydrogen production. Yet, as we will analyse next, their ultimate goals vary in fundamental ways, casting light on the strategic priorities of each country.
4.2.2 Setting the Goals and Targets
In the case of Chile, its Strategy outlines particularly ambitious goals. By 2025, the country aims to be the lead recipient of green hydrogen investments in Latin America with $5 billion, have 5 gigawatts (GW) of electrolysis capacity installed or under development, and produce 200 kilotons (kt) of green hydrogen a year.Footnote 22 By the end of the decade, Chile aspires to become the global leader in exporting green hydrogen and its derivatives ($2.5 billion), produce green hydrogen with the lowest levelized cost worldwide ($1.5/kg) and establish itself as the global leader in green hydrogen production through electrolysis (25 GW).Footnote 23 By mid-century, Chile aims to lower its levelized cost of hydrogen (LCOH) to $0.8/kg.Footnote 24
Colombia’s Roadmap also lays out ambitious goals, though comparatively smaller in scale. By 2030, Colombia aims to develop 1–3 GW of electrolysis backed by 1.5–4 GW of renewable energies, reach green hydrogen costs of $1.7/kg, and produce at least 50 kt of blue hydrogen via CO2 capture.Footnote 25 Colombia’s Roadmap also aims to deploy a fleet of 1,500 to 2,000 light-duty vehicles, 1,000 to 1,500 heavy-duty vehicles, as well as 50 to 100 hydrogen re-fuelling stations.Footnote 26 To achieve these goals, the country plans to mobilize $2.5–5.5 billion in investments over the decade, mainly from the private sector.Footnote 27
Brazil’s Work Plan contrasts with less defined goals and targets, perhaps owing to its nature as a triennial plan and not a long-term strategy. The main objectives set forth therein are to disseminate low-carbon hydrogen pilots nationally by 2025, become the most competitive global producer of low-carbon hydrogen by 2030 and to establish low-carbon hydrogen hubs by 2035.Footnote 28 However, the Plan stops short of specifying detailed figures for these objectives.Footnote 29
When juxtaposed, the hydrogen strategies of these countries exhibit diverse (and even rival) goals and ambitions. Chile sets the bar high, aspiring to global leadership in green hydrogen production and export, as evidenced by its goal to achieve the world’s lowest LCOH – a benchmark Brazil also aims to surpass. Colombia, in comparison, while also intent on becoming an important player in the hydrogen market, sets more modest but concrete goals. This includes, like Chile, specific targets for investment, electrolyser capacity and LCOH. Unique to Colombia’s strategy, however, is the inclusion of detailed goals for the transport sector and blue hydrogen production. These distinctions not only illustrate the individual ambitions of Chile, Colombia and Brazil, but also hint at the unique policy choices underpinning their hydrogen initiatives, to which we will turn to next.
4.2.3 Defining the Strategic Approach
Chile’s hydrogen policy distinctively focuses on ‘green’ hydrogen, bypassing mentions of ‘blue’ hydrogen or other variants.Footnote 30 This is not surprising if one considers that Chile imports nearly 98 per cent of the fossil fuels it uses, while it boasts an estimated renewable energy generation potential that exceeds 2,300 GW – seventy times its currently installed electrical capacity.Footnote 31
In contrast to Chile’s green-centric model, Colombia adopts a more inclusive approach which includes both ‘blue’ and ‘green’ hydrogen. Explicitly mentioning its abundant reserves of oil, natural gas and coal,Footnote 32 its Roadmap emphasizes the potential for harnessing these resources for hydrogen production when coupled with carbon capture, utilization and storage (CCUS) technologies.Footnote 33 In this regard, while it recognizes green hydrogen’s significance in the longer term, the strategy assigns blue hydrogen a key transitional role.Footnote 34
Brazil’s Work Plan, for its part, deviates from a previously heralded and even more eclectic ‘rainbow’ hydrogen approach, which included ‘grey’ hydrogen,Footnote 35 steering its strategy towards ‘low-carbon’ hydrogen production.Footnote 36 Interestingly, in opting for this terminology, Brazil forwent the traditional ‘colour-book’ classification, adopted by Chile and Colombia in their initiatives, echoing the preference of the International Energy Agency (IEA) for an emissions intensity-centric framework instead.Footnote 37 Under this classification, Brazil’s Plan includes hydrogen derived from a wide variety of processes with low lifecycle emissions, including the equivalents of both ‘green’ and ‘blue’ hydrogen.Footnote 38
While these documents reflect a unified movement towards integrating clean hydrogen into their national energy mix, Chile, Colombia and Brazil chart distinct strategic pathways reflective of their unique strengths and goals. The success of these ambitious policies hinges on the creation of enabling governance frameworks that keep pace with the momentum set. The following section examines the regulatory regimes of these countries, analysing how each is tackling the legal complexities of turning their hydrogen aspirations into tangible realities.
4.3 From Policy to Regulation: Status Quo, Challenges and the Path Ahead
Across the national strategies of Chile, Colombia and Brazil, a common theme threads the discourse: the need for a regulatory infrastructure that can enable the widespread deployment and commercialization of hydrogen technologies.Footnote 39 Hydrogen’s multidimensional nature, straddling the lines between a fuel source, a storage medium and an industrial feedstock, necessitates a legal framework that can adapt to its unique characteristics and uses. Indeed, adequate regulation has been recognized as the primary enabler for the industry, providing the foresight and stability needed to invest and scale up hydrogen initiatives.Footnote 40 To this extent, the particularities of regulation are not merely peripheral considerations; they are central to the entire developmental narrative. As this section will examine, classifications, definitions, regulatory competences, safety protocols and certification procedures are all key facets that require precise legal crafting to adequately support the sector’s growth.
4.3.1 Chile
In Chile, significant efforts are underway to align its hydrogen regulatory framework with policy aspirations. Central to this task is the reassessment of hydrogen’s legal classification.Footnote 41 Under Chilean law, molecular hydrogen has historically been (and continues to be) classified as a ‘hazardous substance’.Footnote 42 As such, a suite of standards apply, including safety protocols for its storage and transportation, and occupational health rules.Footnote 43 Nevertheless, as hydrogen expands its applications beyond traditional industrial uses, these existing standards prove inadequate for its broader energy-related roles.Footnote 44 This discrepancy between legacy regulations and new applications emphasized the need for a more appropriate framework.
The call for a regulatory realignment to this effect found its legislative response through the enactment of Law 21,305 in 2021.Footnote 45 This legislation marked a significant turning point in hydrogen’s governance by officially classifying it as a fuel, a measure aligned with Chile’s Strategy.Footnote 46 In doing so, it conferred oversight of hydrogen to the Ministry of Energy, enabling it to pursue a regulatory agenda in line with hydrogen’s new roles.Footnote 47 As part of this agenda, the development of safety standards across hydrogen’s value chain has been a priority.Footnote 48
This legislative progression has led to a regulatory conundrum: under Chilean law, hydrogen is recognized both as a hazardous substance and as a fuel.Footnote 49 While dual classifications are not inherently problematic, the practical implications in this case extend beyond theoretical discord.Footnote 50 As exemplified by the Ministry of Health’s Supreme Decree 43/2016, they manifest in the potential for regulatory overlap and conflict.Footnote 51 In particular, this Decree sets forth safety requirements for hydrogen storage, mandating tank conditions, safety distances and maximum storage capacities.Footnote 52 However, it explicitly carves out ‘liquid and gaseous fuels’ from its scope of application.Footnote 53 This exclusion casts uncertainty over the operational parameters within which hydrogen must be managed: tanks storing hydrogen solely for industrial use might be subject to this Decree, whereas those for fuel purposes might not. This becomes more complex when hydrogen’s end use might span across both energy and non-energy domains. Considering that the risk profiles and mitigation strategies for hydrogen remain invariant throughout its lifecycle, regardless of its final application, this bifurcated governance paradigm risks disrupting regulatory consistency and sowing confusion.Footnote 54
Despite this lack of clear and specific safety regulations for hydrogen installations, interest in pilot projects did not stall. To this extent, Chile introduced a support guide outlining the authorization procedure for hydrogen projects,Footnote 55 a requirement all energy facilities must fulfil.Footnote 56 This guide plays a crucial role in bridging the regulatory gap, allowing pilot projects to import safety standards dictated by foreign standardization institutes such as the American National Standards Institute (ANSI), the International Organization for Standardization (ISO) and the National Fire Protection Association (NFPA).Footnote 57 Since then, there have been attempts to approve an official set of safety regulations for hydrogen installations, which include safety requirements across design, construction, operation, maintenance, decommissioning and other stages.Footnote 58 However, despite the decree containing these regulations having been signed by former President Piñera in 2022, they have yet to enter into force.Footnote 59
Another regulatory development in furtherance of Chile’s Strategy has been the enactment of Law 21,505, which allowed for the inclusion of green hydrogen technologies into the country’s electricity matrix.Footnote 60 This law formally recognized ‘generation-consumption systems’, a classification that includes green hydrogen production facilities.Footnote 61 Amongst other provisions, it allows these systems to both draw energy for electrolysis and contribute surplus power back to the grid.Footnote 62 This, in turn, allows green hydrogen to play a key role in optimizing the use of excess electricity from intermittent renewable sources, effectively managing power supply during peak demand periods.Footnote 63 Also noteworthy, the above classification explicitly extends to water desalination facilities,Footnote 64 of relevance as desalinated seawater is expected to be used in the hydrogen production process.Footnote 65 As Chile faces acute water scarcity challenges,Footnote 66 this inclusion reflects a potential move towards sustainable water usage in hydrogen production in line with public concerns.Footnote 67
While the above analysis demonstrates concrete progress, it simultaneously highlights the need for further legal refinement and comprehensiveness. For instance, in addition to the aspects previously described, Chile still has not formally defined what constitutes ‘green hydrogen’, nor has it established a system for certifying the sustainable pedigree of the hydrogen produced.Footnote 68 As the country positions itself to be a major exporter, addressing these issues is of paramount importance, particularly for hydrogen destined for the EU.Footnote 69
In response to these and other concerns, and as part of its Action Plan, Chile has recently published the latest version of its hydrogen regulatory agenda, shown in Table 4.1.Footnote 70
Table 4.1 Chile’s hydrogen regulatory agenda
| Area of focus | Period | Regulatory action |
|---|---|---|
| General regulatory enablement | 2024–2030 | Approve the Hydrogen Installation Safety Regulations |
| Initiate studies for the regulatory proposal of hydrogen quality and hydrogen refuelling stations | ||
| Present the regulatory strategy for hydrogen derivatives | ||
| Enact the Law on the Use of Seawater for Desalination | ||
| Certification system | 2024–2025 | Develop a strategic proposal for establishing a sustainability certification system for hydrogen |
| 2025–2030 | Strengthen the National Electric Coordinator’s National Registry of Renewable Energies (RENOVA), which will serve as the main platform for hydrogen certification | |
| Permitting system | 2023–2025 | Strengthen the dependencies that grant critical permits for the proper development of the hydrogen industry |
| 2023–2024 | Update the Guide for the Submission of Hydrogen Projects to the Superintendency of Electricity and Fuels (SEC) | |
| 2023–2026 | Implement a comprehensive reform of sectoral permits | |
| 2024–2026 | Develop and establish the technical criteria for the environmental assessment of projects related to the value chain of green hydrogen and its derivatives | |
| 2024–2030 | Strengthen the Environmental Assessment Service (SEA) and the services involved in the environmental assessment process |
Simultaneously, Chilean lawmakers are actively pursuing legislative initiatives to address these gaps. Bill 14756-08 stands out amongst them, aimed at establishing a broad legal framework for promoting the production and use of green hydrogen in Chile.Footnote 71 Following the Strategy’s green-centric approach, the bill only addresses ‘green hydrogen’, which it defines as hydrogen produced through renewable energy sources utilizing water electrolysis or other approved technologies.Footnote 72 Also of importance, the bill incorporates provisions for establishing a hydrogen certification system, essential for verifying the renewable origins of green hydrogen.Footnote 73 As of the time of writing, Bill 14756-08 is, however, still in the early stages of consideration within its originating chamber.Footnote 74
As this analysis shows, Chile finds itself in a transitional phase as regulations play catch-up to policy ambitions, displaying the inherent complexities in this hydrogen transition. Nevertheless, the country’s regulatory environment is evolving steadily, as evidenced by the number of hydrogen regulations already enacted, those being developed and those planned for future development. Patient persistence in seeing these efforts through will determine whether Chile seizes the opportunities this new energy paradigm presents.
4.3.2 Colombia
Like its neighbour, Colombia is also deeply immersed in a regulatory overhaul. It too recently reclassified hydrogen, defining it as an energy vector suitable for energy storage, fuel or industrial applications.Footnote 75 This development, contained in the Ministry of Mines and Energy Decree 1476 of 2022, lays the groundwork for the creation of safety and technical standards better suited to its emerging roles.Footnote 76 Despite this reclassification, hydrogen continues to be regulated as a hazardous substance,Footnote 77 necessitating compliance with existing safety and technical regulations.Footnote 78 These, however, are considered insufficient and technologically outdated for hydrogen’s new roles,Footnote 79 with Decree 1476 calling for their review and update, in particular those governing hydrogen transport.Footnote 80 As of the cut-off date, no updates have been announced. Regarding other elements of the hydrogen value chain, specific safety and technical standards remain undefined.Footnote 81
Shifting focus from classifications to definitions, Colombia’s legal delineation of ‘green hydrogen’ has undergone successive refinements that both expand opportunities and introduce complexity. Initially, Law 2099 of 2021 defined green hydrogen narrowly as produced exclusively from listed non-conventional renewable energy sources, such as wind, solar and biomass.Footnote 82 In 2022, this definition was de facto broadened by Decree 1476, which allows green hydrogen projects to also utilize grid-sourced electricity for their production processes, provided the electricity is verified through bilateral contracts and renewable certificates.Footnote 83 Subsequently, Law 2294 of 2023 formally expanded the definition of Law 2099, introducing another layer to green hydrogen’s evolving concept. According to this expanded definition, the green label can also be achieved by balancing a facility’s self-generated renewable injections to the grid against any extracts for hydrogen production.Footnote 84 As long as injections meet or exceed production draws, the produced hydrogen retains its green designation.
Consequently, as it stands, three different definitions of green hydrogen coexist in Colombia’s legal framework. While purely self-generated renewable energy serves as an unambiguous pathway for green hydrogen production, the differing grid-reliant models that have emerged introduce legal uncertainty in determining the compliance and sustainability credentials of green hydrogen projects. Creating further overlap, Decree 1476 also defined ‘low-emission hydrogen’, tying its designation to a to-be-determined emissions threshold.Footnote 85 As of the cut-off date, rules for the verification and operationalization of the two grid-based alternatives remained pending, as did the emissions threshold for ‘low-emission hydrogen’.
In contrast to the multi-conceptualization of green hydrogen, the definition of ‘blue hydrogen’ under Colombian law is more straightforward. In particular, Law 2099 defines it as hydrogen produced from fossil fuels, incorporating a CCUS system within its production process.Footnote 86 This formal incorporation of both green and blue hydrogen into Colombia’s legal regime represents a foundational step towards fulfilling its hydrogen commitments as outlined in its Roadmap. More recently, building upon this initial taxonomy, Colombia broadened its hydrogen narrative by also legally defining ‘white hydrogen’,Footnote 87 a move in line with its intention to explore for natural hydrogen deposits within the country’s geology.Footnote 88
Despite these advancements, important gaps remain in Colombia’s regulatory framework, such as the absence of a hydrogen certification system and the lack of comprehensive technical and safety standards for the hydrogen value chain.Footnote 89 Addressing these and other challenges, however, is part of Colombia’s regulatory agenda, outlined in Table 4.2.Footnote 90
Table 4.2 Colombia’s hydrogen regulatory agenda
In line with this agenda, Colombian legislators have drafted several legislative proposals, including Bill 275/2022C. Designed as a comprehensive umbrella legislation, the bill’s primary objective is to bridge existing regulatory voids while promoting the growth of, interestingly, ‘low-emission’ hydrogen.Footnote 91 In line with this taxonomy, the bill defines it as hydrogen produced from hydrocarbons with CCUS technologies, as well as from renewable energy sources, amongst other methods.Footnote 92 In all cases, however, it must meet the greenhouse gas (GHG) emission threshold set by the relevant ministries. This new emissions-based classification, however, does not replace the current ‘blue’ and ‘green’ definitions, but rather explicitly covers them, potentially creating further definitional overlap.Footnote 93 Also of importance, the bill directs the relevant government bodies to establish the emissions threshold for low-emissions hydrogen, and to formulate regulations spanning technical specifications, safety protocols, certification systems and integration into the country’s energy matrix, alongside other aspects.Footnote 94 Status-wise, Bill 275/2022C had been approved by the Chamber of Representatives in early 2024 and was awaiting treatment in the Senate.Footnote 95 However, the bill has since been shelved, requiring a complete restart of the legislative process.Footnote 96
As evidenced by the preceding analysis, Colombia’s hydrogen governance is undergoing a period of important evolution, in many respects reflecting the process also underway in Chile. Colombia’s path through this regulatory transformation thus far shows its commitment to seeing its policy ambitions through, as well as the challenges along the route towards maturation. While recent developments serve as crucial legal implementations of the country’s Roadmap, the regulatory environment remains underdeveloped, with key areas still awaiting further definition and operationalization. Like Chile, continued efforts in addressing these gaps will be essential in establishing a robust hydrogen ecosystem in Colombia.
4.3.3 Brazil
Brazil’s hydrogen regulatory framework, in a more nascent stage compared to Chile and Colombia, is marked by a dynamic parliamentary scene teeming with activity. As acknowledged by the Brazilian Energy Research Company (EPE), the country lacks adequate institutional and regulatory governance to support the deployment of hydrogen’s diverse applications and usage scenarios.Footnote 97 This situation presents challenges in addressing concerns such as hydrogen’s oversight, definitions and classifications, safety and technical standards, and certification processes.Footnote 98
In this regard, under Brazilian law, hydrogen retains its traditional classification as a hazardous good, which encompasses both flammable gases and liquids.Footnote 99 This subjects hydrogen’s handling to, inter alia, the Brazilian Norm NBR 14725:2023 and the resolutions issued by the National Land Transport Agency (ANTT).Footnote 100 Specifically, NBR 14725:2023 outlines hydrogen’s labelling requirements in line with the Globally Harmonized System of Classification and Labelling of Chemicals (GHS),Footnote 101 while ANTT Resolution 5998/2022 sets forth requirements for the identification, packaging, marking and documentation for the transport of hydrogen.Footnote 102 While these regulations provide a safety baseline consistent with its current uses, they fail to address the specialized needs of hydrogen’s new applications across its value chain, mirroring the challenges that Chile and Colombia also face.
In view of these shortcomings, Brazil has outlined a broad regulatory agenda within its Three-Year Plan.Footnote 103 This agenda, as shown in Table 4.3, spans a wide spectrum of measures, ranging from defining low-carbon hydrogen and assigning oversight to establishing adequate safety and technical norms for its novel applications.
Table 4.3 Brazil’s hydrogen regulatory agenda
| Goal | Regulatory action |
|---|---|
| Improve the institutional, legal and infra-legal frameworks | Draft regulation establishing the definition of low-carbon hydrogen |
| Propose text amending Law 9.478/1997 in order to provide for activities related to low-carbon hydrogen and confer relevant competences on the National Agency of Petroleum, Natural Gas and Biofuels of Brazil (ANP) | |
| Draft report mapping the regulations that establish existing competences and gaps | |
Develop the codes, norms, standards and certifications in line with the timetable and development of international rules Create carbon-intensity certification mechanisms for hydrogen and ethanol chains derivatives | Propose certification governance model |
| Propose product coverage and scope | |
| Analyse and interact with international organizations for certification systems | |
| Propose a certification standard for the carbon-intensity bands of the hydrogen and derivatives produced in Brazil | |
| Foster interrelationships between sectors, and bolster harmonization and cooperation between government agencies | List governance instruments for interrelations between sectors, harmonization and cooperation to be improved or drawn up |
| Propose new governance instruments and/or revise existing governance instruments between government agencies | |
| Study the possibility of blending hydrogen into the existing natural gas network | |
| Enact additional safety standards | List additional safety standards or revisions to standards |
| Propose new additional safety standards or revisions to standards | |
| Develop regulations, codes, norms and standards for new hydrogen uses and technologies | Draft National Electricity Agency (ANEEL) normative resolution(s) for the insertion of storage systems in the grid, including via hydrogen |
| Develop ANP technical note on international specifications for hydrogen as a transport fuel | |
| List regulations, codes, norms, standards for new uses and technologies | |
| Propose regulation, codes, norms, standards for new uses and technologies |
In line with this plan, several concrete actions are already underway, such as studies on low-carbon hydrogen certification schemes.Footnote 104 In parallel, as mentioned, Brazilian lawmakers are currently drafting and deliberating upon various hydrogen bills aimed at legally enabling its policy ambitions. Amongst these, three proposals have garnered particular attention.
Bill 2308/2023, originating from Brazil’s Chamber of Deputies, sets out to establish the legal framework for hydrogen in the country.Footnote 105 In line with Brazil’s Work Plan, it focuses primarily on ‘low-carbon hydrogen’.Footnote 106 Unlike the Plan, however, it defines it using a fixed emissions intensity threshold – four kilograms of carbon dioxide equivalent (CO2e) per kilogram of hydrogen produced.Footnote 107 This numerical approach, while improving legal certainty in the short term, raises concerns about its adaptability to evolving market dynamics and technological advancements.Footnote 108 In fact, in line with the latest EU-delegated acts, the emissions threshold for hydrogen to be considered low-carbon is 3.38 kilograms of CO2e per kilogram of hydrogen.Footnote 109 To this extent, Brazil’s potential adoption of a higher threshold could impact its alignment with international standards, particularly as the EU moves towards more stringent GHG emission benchmarks.Footnote 110 The bill also refers to ‘renewable hydrogen’, a terminology not present in Brazil’s Plan, defining it as hydrogen produced from listed renewable sources.Footnote 111 Also deviating from the Plan, the bill’s latest amendment added the definition of ‘green hydrogen’, which covers hydrogen produced by electrolysis of water, from wind and solar energy sources.Footnote 112 Beyond definitions, the bill also includes risk management guidelines and seeks to establish a hydrogen certification system, amongst other aspects.Footnote 113 Regarding competences, it grants the ANP the authority to oversee hydrogen production activities.Footnote 114
Bill 5816/2023, which comes from Brazil’s Senate, likewise aims to lay certain regulatory foundations for hydrogen’s development in the country.Footnote 115 To this extent, it also includes several important definitions, in particular those for ‘low-carbon hydrogen’ and, intriguingly, ‘green hydrogen’.Footnote 116 In line with its counterpart from the Chamber of Deputies, it defines ‘low-carbon hydrogen’ using the same fixed carbon emission threshold, with the ensuing issues mentioned above.Footnote 117 ‘Green hydrogen’, on the other hand, is defined as hydrogen produced exclusively from listed renewable energy sources, and serves as this bill’s equivalent to ‘renewable hydrogen’.Footnote 118 By adopting this colour taxonomy, however, this bill deviates from the Work Plan’s recommendations regarding hydrogen classifications as well.Footnote 119 Besides these definitional aspects, and similar to the previous proposal, Bill 5816/2023 also contains risk management guidelines and enables the creation of a hydrogen certification system, along with other measures.Footnote 120 As it relates to oversight, it bifurcates competences, assigning regulatory authority over hydrogen production to either the National Electricity Agency (ANEEL) or the ANP depending on the technological pathways.Footnote 121
The third bill, the legislative initiative of the Brazilian Federal Government, also seeks to lay the groundwork for its hydrogen plans.Footnote 122 This bill exclusively addresses ‘low-carbon emission hydrogen’, with its definition adopting practically the same language as Brazil’s Work Plan.Footnote 123 Namely, it defines it as hydrogen produced via technologies and energy sources with low lifecycle GHG emissions or utilizing carbon removal technologies – thus encompassing ‘renewable’, ‘green’ and ‘blue’ hydrogen.Footnote 124 While this approach circumvents the potential limitations of a fixed emission threshold, the bill does not otherwise define what constitutes ‘low lifecycle emissions’, requiring eventual clarification. Definitions aside, the bill also seeks to establish a hydrogen certification framework, with much of its text dedicated to this purpose.Footnote 125 Unlike the previous bills, however, it does not contain safety or risk management guidelines, nor does it assign regulatory competences over hydrogen production activities, except as it relates to naturally occurring hydrogen.Footnote 126
In terms of legislative progression, Bill 2308/2023 represents the most advanced of the three. At the time of writing, the bill cleared the Chamber of Deputies, and is being analysed in the Senate.Footnote 127 Bill 5816/2023 has also made headway, securing approval from the relevant Senate commission and being consequently sent to the Chamber of Deputies for deliberation.Footnote 128 Trailing these proposals, the Federal Government’s bill was presented to the Sustainable Economic and Social Council for further consideration.Footnote 129 As of the time of writing, it has yet to be formally submitted to the Brazilian Congress.
As we can see, while Brazil lacks hydrogen regulations formally in force, it exhibits a flurry of legislative activity across chambers and ministries seeking to enable the industry’s ascent. Still, it simultaneously reveals a universe of conflicting definitions, competences and paths towards certification systems, evidencing the complexity and diversity of views in the country. These varied proposals, each with its unique focus and regulatory approach, emphasize the dynamic and fragmented nature of Brazil’s pursuit of a hydrogen economy. Until the fog of competing visions clears, the precise contours of Brazil’s soon-to-be hydrogen legal framework will remain uncertain.
Overall, the regulatory environment for hydrogen in Chile, Colombia and Brazil reveals an evolving terrain. Each country, dealing with its unique complexities, has set out on a path to establish frameworks conducive to clean hydrogen development. While appreciable progress has been made, significant work remains ahead to truly match policy ambitions. Even so, as the following section will discuss, these regulatory imperfections have not stopped the number of clean hydrogen projects in Chile, Colombia and Brazil from growing considerably.
4.4 From Regulation to Production: On-the-Ground Deployment under Existing Governance
Despite this evolving character of the hydrogen regulatory frameworks in Chile, Colombia and Brazil, the pace of on-the-ground project development is continuing. Developers are forging ahead, undeterred by the gaps and inadequacies in existing governance.Footnote 130 This section briefly explores these tangible developments, highlighting how, even amid a backdrop of regulatory uncertainty, the industry is making strides in turning policy visions into concrete projects.
This apparent paradox between incomplete regulation and robust project activity stems, at least in part, from these countries’ constitutional provisions enshrining a principle of freedom of enterprise. Namely, in Chile, Colombia and Brazil, business activity can proceed freely absent explicit prohibition, thus requiring no prior authorizations or permits except as provided by law.Footnote 131 In this context, hydrogen-related activities across the value chain are, by default, free to be pursued and developed, provided they adhere to any applicable rules. This backdrop of flexibility has provided latitude for the hydrogen industry to advance even under transitional governance.
In this scenario, absent specific legal provisions, hydrogen ventures remain subject to the same permitting obligations and licensing protocols imposed universally across infrastructure projects. Thus, hydrogen undertakings, akin to hazardous chemical production plants in many respects,Footnote 132 require an array of permits to break ground and eventually become operational. This process typically entails adherence to a diverse range of mandates, including but not limited to site planning, construction compliance, environmental impact assessments, water resource management, waste disposal protocols and observance of health and safety guidelines.Footnote 133
Pragmatically leveraging the existing frameworks, over 100 hydrogen projects across different phases have been logged across these countries as of late 2023, spanning from initial feasibility studies to fully operational plants.Footnote 134 More than half of these are in Chile, with at least three projects under construction and six already operational.Footnote 135 Amongst these, the Cerro Pabellón microgrid pilot project, operational since 2019, has been utilizing solar energy to generate 10 tonnes of green hydrogen per year.Footnote 136 Of larger scale, the Haru Oni demonstration plant is capable of producing 130,000 litres of e-fuels per year, making it the first operating e-fuels facility in the world.Footnote 137
Colombia’s hydrogen sector includes twenty-seven projects across various stages, with three in construction and four operational.Footnote 138 Notably, in early 2022, the Ecopetrol Group launched a three-month pilot project with the aim of producing 20 kg daily of high-purity green hydrogen for refinery usage. While small-scale, the pilot’s objective was to assess the technical and environmental feasibility and performance of green hydrogen generation at the Cartagena Refinery.Footnote 139 Capitalizing on this experience, Ecopetrol is set to start the construction of two green hydrogen ‘megaprojects’ in 2024, expected to be amongst the largest in Latin America.Footnote 140
Following closely behind, Brazil accounts for the remaining twenty-four projects, with two operational and a third under construction. In particular, White Martins has launched a green hydrogen production project with a yearly output of 156 tonnes destined for the local market.Footnote 141 Importantly, this project has been certified by TÜV Rheinland, making it the first plant in Latin America certified to produce green hydrogen.Footnote 142 The second operational undertaking is EDP Brazil’s pilot project, part of a larger R&D initiative, which can produce 250 normal cubic metres of hydrogen gas per hour – operational hours determining annualized output.Footnote 143
This overview reveals a significant trend: although the regulatory structures may still be in a state of flux, they have not impeded the practical progression of hydrogen pilot projects. Still, reliance on (permitting) frameworks not specifically designed with the particularities of hydrogen projects in mind poses risks and increases stakeholder uncertainty. The varied nature of hydrogen undertakings, shaped by diverse technologies and processes, stresses the need for a tailored regulatory approach. This requires not only the adoption of hydrogen-specific regulations, as previously discussed, but also a thorough review and amendment of existing permitting structures in line with the characteristics of hydrogen projects. Recognizing this imperative, the strategies of Chile, Colombia and Brazil all include actions towards adapting their permitting procedures.Footnote 144 As the industry shifts from scattered pilots to widespread commercialization, these countries’ continued regulatory efforts remain integral to realizing hydrogen’s potential across the region.
4.5 Conclusion
The hydrogen landscape in Latin America, as exemplified by the endeavours of Chile, Colombia and Brazil, is marked by promise and challenge. Driven both by growing global demand and the motivation to decarbonize their economies, their initiatives represent a regional shift towards embracing clean hydrogen. These resource-rich countries have quickly progressed from articulating ambitious strategies to dealing with the complexities of designing enabling regulatory frameworks. While distinct in approach and execution, their policies converge on a common goal: to position themselves as major players in the impending hydrogen economy.
However, as their experiences reveal, the path from promise to production is fraught with challenges. Indeed, creating a regulatory environment that accommodates hydrogen’s multidimensional nature is proving to be a demanding task, with governance structures struggling to match the pace of technological developments and market demands. Yet, despite these regulatory uncertainties, interest in clean hydrogen projects continues to grow, with pilot ventures forging ahead undeterred.
As Latin America looks to the future, the hydrogen promise appears compelling, even if exacting. The experiences and lessons emerging from Chile, Colombia and Brazil offer valuable insights for other countries, highlighting the critical role of coherent policy and regulatory frameworks in the transition towards a hydrogen future. While the full realization of Latin America’s hydrogen potential remains to be seen, the current momentum offers reasons for optimism.
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