Why Thyssenkrupp has its eye on Brazil's green hydrogen market

A recently approved bill creating the low-carbon hydrogen development program (PHBC) in Brazil includes the granting of over 18.3 billion reais (US$3.4bn) in tax credits between 2028 and 2032, encouraging the adoption of green hydrogen in sectors that are difficult to decarbonize, such as fertilizers, steel, cement and heavy transportation.

Luiz Antonio Mello, Thyssenkrupp Uhde's head of sales for Brazil, believes the government incentives will make projects focused on the production of low-carbon hydrogen viable in the country, where he projects demand for around 40 plants by 2050.  

In this interview, Mello tells BNamericas about the potential market for industrial decarbonization and shares details regarding Thyssenkrupp’s plans.

BNamericas: How can green hydrogen help decarbonize CO2-intensive industries?

Mello: One way to decarbonize is through direct electrification, like the case of a train that stops running on diesel oil and becomes electrified based on a renewable source. In some segments, such as large modes of transportation like cargo ships and big trucks, direct electrification is not possible. 

Today, it’s not possible to use batteries for these cases because the weight of the batteries alone would make the solution unfeasible. So, hydrogen can be used, being transformed into green methanol. Shipbuilding companies are already adapting engines to this.  

BNamericas: Does Thyssenkrupp have any decarbonization projects under development?

Mello: We’re committed to zero carbon by 2050. So, we’ll have to reduce our direct emissions by 30% by 2030, considering scopes 1 and 2. The biggest project to achieve this is the decarbonization of our steel business area. We have some steel production plants in Europe. And we have more than 2bn euros from the German government funding this and a direct contribution of 1bn euros from Thyssenkrupp to replace coal with hydrogen. That's more than 2.5Mt of green steel per year, roughly a third of what Brazil produces in terms of steel. 

In Brazil, where we don't have steel mills, our role is to enable other companies to implement solutions based on green hydrogen and derivatives, such as green fertilizers and methanol, as well as supplying equipment.  

BNamericas: Why are you interested in promoting decarbonization?

Mello: We believe that the group's future will be based on decarbonization solutions. We have a business area focused on this. This is where green hydrogen and the production of cement with low CO2 emissions come in, for example. We believe that the industry’s demand for green solutions will grow over the next 30 years. 

BNamericas: Are we talking about something economically viable? And does the bill establishing the PHBC contribute to this?

Mello: The bill contributes a lot because the scenario we have today in Brazil is that hydrogen ends up largely replacing the use of natural gas. And gas in Brazil has historically been a very expensive input. So much so that we produce very little fertilizer here. Most of it is imported, bringing the carbon footprint from abroad into Brazil and there's the issue of international instability, with Russia being one of Brazil's main fertilizer suppliers.

The issue is investment. To make green fertilizers, new plants will have to be built. So, the government incentive is very important because it makes it possible for the investor to pay back this initial investment more quickly. It was very well structured because it won't compromise the government's cash flow. The investor will have to invest to build the plant. And when it starts producing, it will be generating jobs, taxes and adding to the local production chain. 

BNamericas: There are several green hydrogen MOUs signed in Brazil. What are the prospects for large-scale plants getting off the ground?

Mello: The bill allows for subsidies to be granted from 2028 for those who are producing in that year. So, for this to happen, the project needs to start being implemented in 2026 at the earliest. I think we'll start seeing announcements between the end of 2025 and the beginning of 2026. 

BNamericas: Is Thyssenkrupp interested in supplying electrolysis technologies and other solutions for green hydrogen production?

Mello: This is a major focus for us. We have Thyssenkrupp Nucera, which is focused on electrolysis technology to produce green hydrogen. Today, it’s the company with the largest manufacturing capacity for these electrolysers, with an order book equivalent to more than 3GW of power. 

BNamericas: Do you have any demand projections for green hydrogen plants for Brazil?

Mello: By 2050, in the world, there will be 2,000GWa, which will become more than 6,000GW of installed renewable energy generation capacity. In Brazil, we're talking about around 40 green hydrogen plants or derivatives consuming around 40GWa, in other words, approximately 120GW of installed capacity.