Why IFC looks at Brazil's green hydrogen potential with ‘immense interest’

The IFC, the World Bank’s private sector arm, is eyeing the development of Brazil's nascent green hydrogen segment.

"We have immense interest in the green hydrogen area and in the development of the entire integrated chain. Brazil was identified as one of the countries with the largest potential for the development of green hydrogen production in the world," the head of IFC in Brazil, Carlos Leiria Pinto (pictured), tells BNamericas.

"We’re not looking at specific projects yet, we have a team within IFC that’s looking at the potential of projects that are not yet financeable, to identify which projects tend to be financeable and I believe we will have financeable projects in the segment in four years." 

A key element for Brazil’s great potential is access to abundant renewable energy sources, but this potential is currently held back by the lack of a federal government policy.

On the private sector front, Brazilian port complexes are spearheading efforts to place the region’s largest country on the global green hydrogen map. 

These include the Pecém port in Ceará state, Suape in Pernambuco and Açu in Rio de Janeiro, and they have signed a series of MOUs with multinational firms, including EDP, Fortescue, Qair and Engie, to evaluate projects.

"I believe that in 2022 we will go through a phase of signing more robust contracts for projects with economic and financial viability, with the expectation of reaching higher levels of green hydrogen production in late 2024 or early 2025," Duna Uribe, Pecém's commercial director, told BNamericas in a recent interview.

BRAZIL PLANS

While green hydrogen is a target for the medium term, IFC has several action plans for Brazil in the coming years.

Among its top priorities is continued support for the agenda of concessions and PPPs in the water and sanitation sector. A major regulatory reform last year has increased private participation in the sector.

"The water and sanitation sector continues to be a priority in Brazil for us, we have seen several projects underway in Brazil, with the upcoming concessions auction in December and privatizations. What we want to do more is to support companies in the segment to stimulate water reuse projects," said Pinto.

IFC is also focused on supporting streetlighting PPPs. Recently, it signed an accord with state-run bank Caixa to help it structure projects in this sector.

OTHER SECTORS

The multilateral lender also plans to increase its work on projects in the railway and health sectors.

"This is a sector that we’re looking at with interest to support the structuring of PPPs and concessions. The railway sector has a major challenge, which is the social and environmental barriers for the projects, but railways in itself is a sector that produces less greenhouse [gas]," Pinto said.

ESG 

Demands for projects to comply with ESG (environmental, social and governance) best practices are growing in Brazil due to pressure from banks, according to Pinto.

"Regarding the ESG agenda I think the major transformation is taking place through the financial market in Brazil. Banks are more concerned about financing, they look at more environmentally-friendly projects. The [Brazilian] central bank has also established guidelines for banks to further analyze the environmental risks before financing projects."