Renewables developer Solatio has received federal government approval for a 3GW green hydrogen and ammonia plant in the Export Processing Zone (EPZ) of Parnaíba, in the northeastern Brazilian state of Piauí — opening the door to major tax breaks, including a 75% cut in corporate income tax.
The project will require R$27bn ($4.7bn) in investment, with a final investment decision (FID) expected in the first half of this year, according to a press release from the state government of Piauí.
The development, which is in the final stages of permitting, is also mainly geared towards meeting demand for low-carbon fuels in Europe and Asia.
Companies operating in an EPZ in Brazil are required to have 80% or more of their revenues from exports, but are exempt from almost all export and import licence or authorisation requirements.
These companies are also exempt from taxes, including manufactured product tax and import tax, on buying goods for use in the EPZ from the domestic and international markets.
In the north and northeast of Brazil, these companies are also eligible for an up-to-75% reduction in corporate income tax.
Brazil’s National Council of Export Processing Zones had last year granted similar approval for Fortescue’s green hydrogen and ammonia hub — set to feature 1.2GW of electrolyser capacity in the first phase and reach 2.1GW in the second — located in the Pecém EPZ.
However, although Fortescue has prioritised FID on the $5bn Brazilian project, it has not yet committed to this investment.
Meanwhile, the state of Piauí has also been chosen as the location for an even larger green hydrogen project, the 10.8GW Green Energy Park, which seeks to leverage extremely strong solar and wind resources backed up by hydropower to produce cheap H2 which complies with the EU’s definition of a “renewable fuel of non-biological origin” (RFNBO).
Solatio itself has already developed nearly 21GW of solar projects in Latin America and Europe.
The Brazilian federal government had last year signed into law R$18.3bn of tax credits for clean hydrogen producers, as well as launching a separate R$6bn fund for low-carbon H2 hubs.
