Publications

Category: Institutional

Category: Banking, insurance and finance

Raphael Zono, Renan Valverde Granja and Paula Lumi Sonoki

Created and regulated by Law No. 14,130, of March 29 of this year, the Investment Fund in Agroindustrial Production Chains (Fiagro) emerges to help develop the agribusiness sector. Its enactment amended Law No. 8,668/93, which provides for the creation and tax regime of Real Estate Investment Funds (FII).

"The new type of fund allows domestic and foreign investors to invest in the sector through investments in agribusiness assets (such as credit or securitization securities issued by companies in agro-industrial production chains) or purchase of properties, which can then be leased or sold to producers." reporting by Janary Júnior, published on the website of the Brazilian House of Representatives.

The high indebtedness of the federal government, fiscal restrictions, and socioeconomic issues suggest an increasing shortage of public resources for the agribusiness sector in the coming years. These difficulties make room for private investors to make a strategic contribution to Brazil's productive sector through instruments such as the new fund.

Fiagro allows investments directly related to agribusiness financing, to be organized in the form of a condominium of a special nature intended for the investment, alone or jointly, in:^[1]

• rural real estate;
• participation in companies that conduct activities that are part of the agro-industrial production chain;
• financial assets, securities, or paper issued by individuals and legal entities that are part of the agro-industrial production chain;
• agribusiness credit rights and securitization securities issued backed by agribusiness credit rights, including Agribusiness Receivables Certificates (CRAs) and units of Investment Funds in Credit Rights (FIDCs) – standardized and non-standard – that invest more than 50% of their equity in agribusiness credit rights;
• real estate credit rights related to rural real estate and securitization securities issued with backing in these credit rights, including CRAs and quotas of FIDCs – standardized and non-standard – that invest more than 50% of their assets in real estate credit rights; and
• investment fund shares that invest more than 50% of their equity to the above assets.

Overriding of presidential vetoes

When enacted, Bill No. 5191/20, proposed by Federal Deputy Arnaldo Jardim (Cidadania/SP) to create the new fund, it lost its main tax characteristics, considered one of the biggest attractions for Fiagro investors. Vetoes done by the Brazilian President and proposed by the Ministry of Economy, based on the claim of the Federal Revenue Service that the law would generate loss of revenue, eliminated tax benefits that sought, above all, to equate Fiagro to the FII.

The vetoes, however, did not resist the pressures of the Parliamentary Agricultural Front (FPA) and were overridden by the Brazilian Congress on June 1, 2021.

Collection of and exemption from the IR

With the overriding of the veto, it was established that rural producers can pay off the real estate asset in Fiagro in return for the receipt of units. In the event of disposal or redemption of units, the income tax (IR) will be proportional to the amount of the units sold, which brings about greater immediate liquidity. The mechanism aims to favor the capitalization of members of the Brazilian agribusiness chain, including family groups.

Another benefit reincorporated after the overriding of presidential vetoes was the exemption from IR for income distributed by Fiagro – remuneration produced by Agricultural Deposit Certificate (CDA), Agricultural Warrant (WA), Agribusiness Credit Rights Certificate (CDCA), Agribusiness Letter of Credit (LCA), and CRA.^[2] Individual investors are entitled to this benefit when:^[3]

• the fund has more than 50 individual unitholders; and
• no individual unitholder owns more than 10% of the shares issued by Fiagro or the right to obtain more than 10% of the fund's income.

By providing for non-application of IR at the source for income and gains obtained from fixed income or variable income financial investments, fiagro is truly equated with FII. There are, however, some differences between the two funds.

While the FII makes investments in the real estate sector, such as investments in assets specifically related to the real estate market without having to buy a property, Fiagro is intended for investments related to the agribusiness sector in various ways, as in the assets already mentioned – rural real estate, participations in companies that conduct activities that are part of the agro-industrial production chain, real estate credit rights related to rural real estate, securities or paper issued by individuals and legal entities that are part of the agro-industrial production chain, among others.

The expectation is that the new fund will stimulate the entry of rural producers, national and international, into the financial market, creating important alternatives for rural credit.

For Congressman Arnaldo Jardim, rural credit is an indispensable tool to keep Brazilian agriculture among the most productive in the world. "We believe that the Fiagro has the potential to boost the Brazilian land market, giving it greater transparency and liquidity, making the price of land formed by market forces in a more fluid and transparent way, which would benefit current landowners in the event of a need to sell their properties", opined the deputy.

With the creation of the fund, investors gain a safe and flexible option, which will bring the agribusiness capital market closer together and encourage other innovations.

The law establishes that it is up to the Brazilian Securities and Exchange Commission (CVM) to authorize, discipline, and supervise the creation, operation, and administration of Fiagro, and, because it is real estate,^[4] future discussions and instructions on the new fund should be expected.

^[1] See Article 20-A of Law No. 8,668/93, as amended by Law No. 14,130/21

^[2] See Article 3 of Law No. 11,033/04, as amended by Law No. 14,130/21.

^[3] See Article 3, sole paragraph, of Law No. 11,033/04, as amended by Law No. 14,130/21.

^[4] See Article 3 of Law No. 11,033, as amended by Law No. 14,130.

Category: Infrastructure and energy

Created in the second half of 2020, B3's seal of confidence for the free electricity market aims to contribute to the formation of a securer, more efficient, transparent, and, consequently, more liquid market, thanks to increased participation by market participants.

To this end, B3 has implemented its own evaluation methodology that identifies the risk inherent to the contract portfolio of market participants voluntarily registered in a specific system. This methodology uses economic, financial, and transactional data to establish indicators that enable a better ability to read and manage risks, especially in relation to the potential loss in the portfolio of each participant registered.

There are two main elements used in this evaluation: submission of the documentation provided for in the regulation for the seal and risk analysis for the portfolio of participants registered, considering the limits of financial exposure.

The main documents provided for in the regulation for the seal that are factored into B3's assessment of market participants are:

• financial statements and the respective audit reports
• contracts for the purchase and sale of electricity
• documents proving the existence of an advisory board and board of directors
• the existence of a corporate governance program, especially in relation to risk management policy
• the existence of a risk management and internal audit area

In practical terms, each document provided for in the Regulation represents a certain score value which, at the end of B3’s review, results in a total score obtained for the participant’s classification into one of the levels provided for registration of the (1, 2, or 3).

Only global data and information of registered agents may be publicly disclosed by B3. This means that the category (level) assigned to the participant is disclosed in the B3 system and website, whereas the specific score assigned to each agent is privately disclosed to the respective participant.

To carry out risk analysis of participants’ portfolios, B3 uses a specific market model to calculate the market risk and liquidity of its participants. The model is based on economic and financial elements, such as generation assets of electric power generating participants, physical guarantee values of these assets and load assets of electricity-consuming agents.

As a result of this risk analysis, the participant may be classified as adherent or non-adherent, and this classification will be disclosed in the B3 system for access by other registered participants. Still under the rules for the seal, B3 does not assign a status to free or special consumers, distributors, and transmitters of electricity.

After analyzing the information and documents forwarded by participants requesting registration, B3 indicates the category assigned to the participant, who may respond and opt for continuation or cancellation of the certification process. Reconsideration of the classification assigned by B3 may also be requested.

Legal entities registered in the Electric Energy Trading Chamber (CCEE) may join the seal system, in addition to the obligations to maintain the authorizations necessary for the exercise of their activities, execution of an association agreement with the system, payment of the applicable costs and charges, submission to B3's rules and procedures for monitoring, and indication of an officer responsible for the relationship with B3.

Although it is applicable only to participants who enter the platform on an optional basis, B3's seal of confidence for the free electricity market represents an advance for modernization of the sector, as it implements a mechanism that strengthens legal certainty and the reliability of the free electricity market.

Category: Litigation

Globalization increasingly demands regulation on cross-border insolvency, and Brazil is no exception. Considering this reality and driven by the Covid-19 crisis, which required rapid responses to the deterioration of the country's economy, Law No. 14,112/20 introduced in Law No. 11,101/05 (Reorganizations and Bankruptcies Law – LRF) an entire chapter dedicated to cross-border insolvency. The amendments were largely inspired by the Model Law on cross-border Insolvency of the United Nations Commission on International Trade Law (Uncitral).

According to article 167a of the LRF, the purpose of cross-border insolvency rules is to provide effective mechanisms for:

• promote cooperation between Brazilian and foreign judges and authorities;
• increase legal certainty for economic activity and investments;
• ensure the fair and efficient administration of cross-border processes, thereby protecting the interests of all those involved (creditors and debtors, as well as other stakeholders);
• protect and maximize the value of the debtor's assets;
• promote recovery of debtors in crisis, protecting investments and preserving jobs; and
• promote the liquidation of the debtor's assets, preserving and optimizing the productive use of the company's assets, property, and productive resources.

In line with the amendments introduced in the LRF, on June 4, 2021, the National Council of Justice (CNJ) published Resolution No. 394/21, establishing rules for cooperation and direct communication with foreign insolvency courts for processing and adjudicating cross-border insolvencies.

Resolution No. 394/21, based on the guide for cooperation and direct communication between insolvency courts issued by the Judicial Insolvency Network (JIN), takes into account especially articles 167-P and 167-S of the LRF. They establish, respectively, that:

• the judge shall cooperate directly or through the judicial administrator with the foreign authority/foreign representatives, and may communicate directly with foreign authorities/foreign representatives, without the need to send letters rogatory, direct assistance proceedings, or other similar formalities; and
• where foreign proceedings and a process of judicial reorganization, extrajudicial reorganization, or bankruptcy relating to the same debtor are ongoing simultaneously, the judge shall seek cooperation and coordination between them.

According to the resolution, direct communication between Brazilian and foreign courts needs to be regulated by rules established in insolvency protocols to be signed by the courts, as allowed in Article 167-Q, subsection IV, of the LRF. These protocols should comply with the guidelines provided for by the JIN, which are even included as an annex to the resolution. However, it is worth mentioning that the JIN guidelines expressly establish that its precepts must be applied by the jurisdictions at the discretion of each court, thus considering the particularities of the specific case.

JIN’s resolution and guidelines are similar to the provisions in the LRF and aim to promote:

• the efficient and timely coordination and administration of cross-border insolvency proceedings (called competing proceedings);
• the management of competing proceedings with the purpose of ensuring respect for the interests of the relevant parties;
• the identification, preservation, and maximization of the value of the debtor's assets, including its business;
• the management of the debtor's assets in proportion to the amount involved, the nature of the case, the complexity of the issues, the number of creditors, and the number of jurisdictions responsible for competing proceedings;
• the sharing of information to reduce costs; and
• prevention or reduction of litigation, costs, and disorder for the parties to competing proceedings.

The direct reporting mechanisms provided for in the resolution need to be regulated by insolvency protocols, which they should also have information on the coordination of certain acts, the holding of joint hearings, and communication with creditors and other stakeholders in competing proceedings.

Insolvency protocols only regulate procedural issues. They cannot change or dispose of substantive issues. According to the JIN, judgments should direct the parties to request implementation of insolvency protocols or decisions derived from JIN guidelines.

These protocols may be modified as needed to reflect any changes in competing proceedings. In such cases, the foreign court should be notified of the change as soon as possible.

An important rule deserves to be highlighted: unless provided for otherwise, the parties may be present as listeners when direct communication between courts is carried out. To ensure their participation, the parties must be summoned at least five days before the communication takes place.

Another important rule that contributes to the transparency and publicity of the acts is the obligation to record and transcribe communications. Copies of the recording and/or a transcript may be joined to the record of the proceedings and made available to interested parties (subject, however, to confidentiality, as determined by the respective court).

In relation to joint hearings, courts may communicate directly, without the presence of the parties, to define procedural rules regarding the insolvency protocol. They may, for example, establish the sequence of acts to be implemented, how foreign courts and/or representatives will participate, the order in which the arguments are made, how decisions will be reached, and what the procedure for coordinating and resolving procedural, administrative, or preliminary issues relating to the joint hearing will be.

After the joint hearing, courts may also communicate directly without the parties present to resolve outstanding issues. However, the insolvency protocol should establish expeditious procedures in order to avoid unnecessary and costly hearings as far as possible.

Attentive to the sovereignty and authority of each of the courts involved, the resolution expressly disclaims that the respective jurisdictions of the courts remain preserved in order to conduct hearings in accordance with the applicable procedural rules.

For all issues presented, the resolution created to regulate the issue of cross-border insolvency is timely and welcome, and especially because it includes important issues such as broad stakeholder participation and procedural efficiency combined with cost reduction.

Category: Real estate

Constitutionally guaranteed (article 5, XXII, Federal Constitution of 1988), the right to property is defined as the right of the owner to use, enjoy, dispose of, and claim the thing (article 1,228, Civil Code).

When the right of ownership is exercised by two or more people over the same property, the so-called common condominium or co-ownership is given, in which the owners become owners of an ideal fraction of the whole. Thus, it is not possible for the co-owners to exercise their rights independently over the entirety of the thing, but only their ideal parts.

In the light of article 87 of the Civil Code, assets that cannot be fractioned without changes in their substance, considerable decrease in their value or impairment of the use for which they are intended, such as buildings, especially urban buildings, and housing units are indivisible. Co-ownership is assigned, for example, to properties acquired by couples (in the proportion of half for each spouse) or properties allocated in inventory to various heirs (in the proportion attributed to each of them in the division).

In a recent decision, the Third Panel of the Superior Court of Appeals (STJ) assessed the limit of the exercise of ownership on indivisible real property when one of the co-owners has debt that, collected in court, gives rise to attachment of the property.

The decision modified the judgment handed down by the Court of Appeals of the Federal District and Territories (TJDFT), which ruling for the impossibility of full expropriation via judicial auction of property held in a condominium pro indiviso, on the grounds that the attachment fell only on the share (50%), not on the entire property. Thus, the STJ allowed full judicial auction of indivisible property duly registered under co-ownership and whose attachment recorded only the debtor's share.

In her opinion, Justice Nancy Andrighi pointed out that banning foreclosure on the good makes attachment ineffective, since it prevents satisfaction of the creditor. On the other hand, article 655-B of the Code of Civil Procedure provides that the right of the co-owner when the attachment is executed must be observed. A very relevant point of the decision handed down by the Supreme Court is the clear protection of the real right of ownership of the condominium unrelated to the execution, stating that the attachment cannot advance on the share of the party that is not a debtor in the proceedings, even if this fact does not prevent the disposal of the entire property.

In clear grammatical and declarative interpretation of the rule, the decision also demonstrates the intention of the civil procedural legislature to (i) give greater effectiveness to the foreclosure procedure to satisfy the creditor's right by removing formal obstacles and expanding the foreclosure measures and (ii) safeguarding the ownership right of the co-owner.

The precedent of the STJ gives the co-owner direct of preference in the auction of the property in equal positions or, if it does not want or is not able to exercise such right, the possibility of being compensated financially for the proportion of ownership it holds in the property, considered to be the value established in the judicial appraisal for the purposes of the auction and not that which is actually obtained in the judicial auction.

In fact, when analyzing article 843 of the Code of Civil Procedure, which upheld the decision handed down by the Supreme Court, it is clear that the legislature intended to protect the assets of the co-owner foreign to the foreclosure process by the measures listed above.

Thus, the STJ ruled that the creditor cannot have his credit right reduced due to the co-ownership, provided that the right of the co-owner is protected.

In practice, although the attachment falls only on the debtor's part, the co-owner may not prevent the sale of the property as a whole, unless he exercises his right of preference and acquires the entirety of the property. If he does not do so, the co-owner will then be reimbursed for the value attributed to the property in the judicial assessment, proportionally to his share.

This decision emphasizes the need to carry out rigorous due diligence when acquiring real property, since a request for a freeze to prevent continuation of foreclosure, brought by the co-owner outside of it, now has a significant precedent in the opposite direction, which allows continuation of the judicial sale and possible conversion of the co-owner's real property right in the equivalent in cash.

Category: Infrastructure and energy

Laura Souza, Gabriel Rapoport Furtado, Ana Clara Gemeinder de Mendonça and Fernanda Quiroga.

Introduction

Global concern regarding the acceleration of the foray of renewable and sustainable energy sources in the energy matrix has contributed strongly to the rise of the green hydrogen (Green H2) market. To the same extent, the number of working groups and initiatives aimed at the promotion, production, distribution, and export of green H2, such as the green h2 hubs, is growing

The goal of the hubs is to enable the use of green hydrogen as a new source of sustainable energy, concentrating private and governmental efforts (local and international) in the definition and implementation of effective policies: partnerships are formed with a view to sharing expertise, technology, and resources that allow the installation of projects supplied with clean energy in strategic locations.

Several countries have mobilized to develop preliminary and feasibility studies in order to effectively implement innovative projects aimed at the production and/or export of green H2. We highlight below some countries that deserve special attention in the development of these projects, in addition to similar initiatives in Brazil and practical aspects of the viability of hubs. A brief summary of relevant international experiences may also be accessed in our Electronic book Green Hydrogen heating up.

The international experience

An important project in Europe is the hydrogen hub in Hamburg, Germany. It arose with the signing of a letter of intent between the giants Shell, Mitsubishi Heavy Industries, Vattenfall, and Wärme Hamburg. In order to enable large-scale green hydrogen production and decarbonization of the energy system and base industries by 2025, the feasibility study for this project includes the transformation of a coal-based plant to the production of green hydrogen with an initial potential of 100 MW, fed by photovoltaic and wind plants.

Also in Europe, the Dutch government estimates that the green hydrogen sector has regulations similar to the electricity and natural gas sectors. The country is conducting research for the use of existing gas networks for the transportation of hydrogen, connected to neighboring countries. This structural advantage is expected to highlight the Netherlands as a relevant hub in north-western Europe.

In the UK, the North of Scotland Hydrogen Programme at the Port of Cromarty Firth is intended for the development of a state-of-the-art hub to produce, store, and distribute hydrogen to the region and other parts of the UK and Europe. The nearest distilleries and ports should be the first to benefit from the clean fuel.

In Saudi Arabia, a green hydrogen project with investment valued at US$5 billion is underway. The proposal is to produce around 650 tons of green hydrogen per day, in an integrated way with the project of the smart city of Neom, close to the country's borders with Egypt and Jordan.

Asia's most relevant project is developed by the state-owned firm Sinopec, China's largest hydrogen producer. The launch is scheduled for no later than 2022 in Inner Mongolia. The estimated production of the project, whose approximate investment is 2.6 billion yuan, is 20,000 tons of green H2. The initial phase of production is valued at 10,000 tons and supported by a solar power station with a capacity of 270 MW and a wind farm of 50 MW.

Sinopec also plans to develop a green hydrogen plant with the same annual capacity in northwest China in Xinjiang, supported by a 1,000 MW solar power station.

In South America, Chile has already demonstrated its intention to become an internationally recognized green hydrogen hub, having presented its National Green Hydrogen Strategy in 2020. The Chilean Ministry of Energy expects that the Region of Magellan (Magallanes), in the south of the country, can use its great wind potential and petrochemical and port experience to become a reference in the production and export of green hydrogen. It is also expected that the northern region of the country, focused on solar energy production, will be a reference in the production of green H2.

Hubs in Brazil

Also in Brazil one can perceive formation of the first productive agglomerations aimed at the production, distribution, and export of green hydrogen. Despite the still incipient regulation of the activity in Brazil, they are gaining relevance, among them the recent initiatives led by the Industrial and Port Complex of Pecém/CE and the Port of Suape/PE.

With regard to the Pecém Complex, a port industrial complex and logistics hub created in order to develop industrial production in the Northeast region of Brazil, notably in Ceará, we highlight the memoranda of understanding (MoUs) entered into with companies interested in installing in the complex, especially White Martins and Fortescue, to explore an on-site hydrogen hub, with investments expected at US$ 6 billion, and produce more than 15 million tons of green H2 by 2030.

To make the venture possible, the Pecém Complex has a vantageous location, which provides competitive logistics costs for the interconnection of the country to relevant consumer centers, such as Europe and the United States, and has a partnership with the Port of Rotterdam, perhaps the main green hydrogen hub in Europe. Other advantages are a sophisticated business ecosystem and an export processing zone capable of reducing costs for local production of green H2.

The Pecém Complex is the result of a coordinated state effort, exemplified by the publication of State Decree No. 34,003/21, which established a strategic working group of which the Federal University of Ceará, the Federation of Industries of the State of Ceará (Fiec), and the government of the State of Ceará are a part. This group was responsible for developing and presenting an action plan focused on the development of public policies for renewable energies aimed at sustainable development and the configuration and implementation of the future green H2 hub in Ceará.

Similar efforts have been conducted by the State of Pernambuco, with a view to securing its position among the global hubs of green H2. State Decree No. 50,731, issued on May 18, 2021, established a multilateral working group within the state executive branch with the purpose of discussing and defining the guidelines for the development of green H2 production projects.

The orbital axis of Pernambuco's efforts also passes through its main port asset, the Port of Suape, one of the largest and most relevant public ports in the Northeast Region, located in the Metropolitan Region of Recife and also found within a port industrial complex aimed at promoting regional economic development. Recently, the Port of Suape published Ordinance No. 62/2021, which grants discounts on its tariff table for vessels powered by green H2.

Pernambuco's efforts seem to have an effect: feasibility studies have already begun on the Green H2 Plant of Pernambuco, headed by Oair Brasil, a French company whose main activity is the production of electricity from alternative sources. It is estimated that the project will be able to mobilize investments in the order of US$ 3.8 billion, which makes it one of the most relevant projects underway throughout the state.

Practical aspects of enabling hubs

Green H2 hubs gain greater relevance in a context where production costs of green H2 are still much larger than those of production of gray or blue H2 (gray H2 is that originating from fossil sources such as natural gas, oil, and coal, and blue H2 is generated by fossil sources, but whose carbon emissions are captured to neutralize the pollution generated).

The production of 1 kg of green H2 via industrial production costs about 5 euros, compared to only 1.5 euro costs for the production of 1 kg of gray H2.^[1] The competitive disadvantage of green H2 continues to be in comparison with blue H2, with the cost of local production of the latter valued at half to one third of that registered with the first.^[2]

To change this reality, the public and private sectors will need to join forces and make heavy investments. Published in January of 2020, the latest Hydrogen Council report entitled Path to Hydrogen Competitiveness: A Cost Perspective, shows that with the robust increase in investment in the sector, the cost of green hydrogen production, storage, and distribution solutions is expected to fall by 50% by 2030.

With more than 80% of its renewable electric matrix, Brazil is a strong candidate for the world's leading player in the production and export of green H2.^[3] For this to be feasible in the near future, it is essential to create public and private mechanisms to support and encourage production and marketing of that fuel. The creation of green H2 hubs thus represents an important pillar to make it economically competitive in relation to other energy sources.

The following are some mechanisms that can be adopted under green H2 hubs:

1. Creation of special areas with tax incentives

Regional, state, and/or municipal tax incentives are important mechanisms to promote investment, as they contribute to reducing costs and increasing the competitiveness of green H2. To this end, it is essential that public and private efforts be combined, as well as alignment of incentive interests in the sector.

In this sense, the Pecém Complex has proved to be a reference of success: in addition to regional tax incentives (because they are located in the region of the Northeast Development Board (Sudene)), state^[4] and municipal, companies installed in export processing zones (MRAs) also have some other taxes and contributions suspended, such as Import Tax and Tax on Industrialized Products.

Tariff incentives for companies that use green H2 as a productive input, in the Hub itself, are also strategies to promote the sector. In this sense, Ordinance No. 62/21, highlighted earlier, confers tariff discounts for vessels powered by green H2.

2. Integration with other industries

The feasibility of green hydrogen projects in strategic areas, where other infrastructure projects (such as hydroelectric, thermoelectric, ports, water, and/or sewage treatment plants) are already located, can be an interesting mechanism to make green H2 projects even more economically attractive.

One possibility would be cogeneration of electricity, within the scope of hydroelectric and thermoelectric plants, in a dynamic similar to that of cogeneration in the production of sugar and ethanol, in which the energy produced from biomass is used in the plant itself and sold to the market.

The production of green hydrogen can also be integrated with port concessions, in which there is remunerated assignment of a certain area for the implementation of green H2 production plants or concession that provides for the implementation of pipelines, to enable the internal transport of green H2. A successful example of port concession integration with green H2 projects is the Port of Suape.

An alternative would be in the context of concessions for water and sewage treatment services, also with the provision of remunerated assignment of an area for the construction of a green H2 production plant or even the integration of sewage treatment plants with power plants by biomass or solid waste.

3. Fostering partnerships between public and private entities

Cooperation and constant dialogue between the public sector (through states, municipalities, and their respective funding agencies) and private partners are essential to make green hydrogen more competitive. It is of interest that states and municipalities establish MoUs with private partners and that promote public policies to assist in the development of regional industry.

The Pecém Complex has as its shareholders the government of Ceará (70%) and the Port of Rotterdam (30%), a partnership that brings in a competitive advantage for the project, as the Port of Rotterdam has been working with various partners to develop a large-scale hydrogen network with the intention of transforming itself into an international hub for the production, import, application, and transport of hydrogen to Europe.

At the international level, fostering public-private partnerships has also proved to be sufficiently effective: in March of 2020, the European Commission launched the European Clean Hydrogen Alliance, a public-private partnership bringing together investors and government, institutional, and industrial partners.

Next steps

The attempt to make green H2 economically attractive and competitive requires time, joint effort of the public and private sectors, and targeted mechanisms for market promotion.

In December of 2021, the National Hydrogen Plan will be announced, which is expected to regulate the development of the hydrogen production chain. The coming months will therefore be decisive in the construction of the public policy of the sector.

Considering this scenario, it is essential that the private sector make effort to study possible regulatory designs to promote green H2, dialogue with public agencies, and provide input to the Ministry of Mines and Energy (MME), the Ministry of Science, Technology, Innovations, and Communications (MCTI), the Ministry of Regional Development (MDR), and the Energy Research Company (EPE).

The series of articles on the green H2 sector, the result of studies by the Machado Meyer Advogados legal team, is a small example of what can be done to foster the sector.

^[1]    The Agillity Effect. Green Hydrogen will soon be competitive. Available at: https://www.theagilityeffect.com/br/article/o-hidrogenio-verde-em-breve-sera-competitivo/. Accessed: July 9, 2021.

^[2]    EPBR Agency. Green hydrogen could stay competitive by 2030, with renewables more economical. Available at: https://epbr.com.br/hidrogenio-verde-pode-ficar-competitivo-ate-2030-com-renovaveis-mais-em-conta/. Accessed: July 10, 2021.

^[3]    Brazilian Hydrogen Association. Available at: http://abh2.com.br/index.php/pt/. Accessed on July 9, 2021.

^[4]    Details on state incentives can be found at the Investor's Guide to Tax Incentives, Investor's Guide - Environmental Licensing and Investor's Guide - Financing Lines, developed by the Economic Development Agency of the State of Ceará (Adece), and in State Decree No. 32,438/17, information about the Industrial Development Fund of Ceará (IFRI).