TotalEnergies SE is considering importing green hydrogen from a multi-billion dollar project under development in northeastern Brazil to supply its European refineries.
The French energy company would be a key buyer from a plant planned by Brazilian renewables developer Casa dos Ventos, said people familiar with the matter who asked not to be identified because the deliberations are private. TotalEnergies, which has a 34 percent stake in the developer’s wind and solar generation unit, also is considering taking a direct shareholding in the project, the people said.
TotalEnergies and Casa dos Ventos have yet to make a final decision on the deal, according to the people. Both companies declined to comment.
The project, which would be developed in stages at the port of Pecem, eventually may reach a capacity of 1.2 gigawatts of electrolysis, which could produce 160,000 tons of green hydrogen per year. Production of green ammonia, which is easier to ship than hydrogen, could reach 900,000 tons a year, according to Casa dos Ventos.
Green hydrogen has been touted as a key fuel for a carbon-free future as it is produced by splitting water into hydrogen and oxygen molecules using renewable energy. However, few large-scale projects to make it have progressed to the construction phase due to costs and technological complexities.
TotalEnergies’ contract would be a new step in the oil major’s plan to reduce its carbon emissions by replacing the 500,000 tons of gray hydrogen – made out of fossil fuels – that is used in its refining processes in Europe with green hydrogen by 2030.
The switch to the clean, but far more expensive, gas is motivated by a planned European Union tax on fuel distributors who fail to meet greener standards, the company has said.
So far, the company has signed contracts for more than 130,000 tons of green hydrogen that will be made in Europe, and for 70,000 tons that is expected to be shipped from Saudi Arabia in the form of green ammonia. Saudi Arabia’s flagship plant in Neom, one of the largest green hydrogen factories in the world, was estimated to cost $8.4 billion in 2023 and aims to start operating in 2026 with a view to export as much as 1.2 million tons of green ammonia per year.
Casa dos Ventos plans to supply about 3 gigawatts of wind and solar to power electrolyzers that make green hydrogen, said the company. The development of renewable energy plants and the green hydrogen factory eventually may result in a total investment of about $5 billion, according to Casa dos Ventos.
Brazil is seeking to encourage investment and kick-start a low-carbon hydrogen industry and recently passed an eagerly anticipated law that offers some tax exemptions for projects. South America’s largest economy is capable of making the cheapest green hydrogen in the world excluding subsidies, according to BloombergNEF.
The port in Ceara state may become the first big export hub for green hydrogen in Brazil, with other energy companies such as Fortescue also mulling factories in the location.
“The green hydrogen plant in Pecem will be Brazil’s flagship project for hydrogen export,” said Casa dos Ventos in a statement. A final investment decision for the factory is expected for next year, while operations should start in 2029, according to the company.
