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Energy transition incentives in Brazil: low carbon hydrogen (Rehidro and PHBC credits) and offshore wind

Last verified: 2026-10-27 · Status: Changing

Brazil has a legal framework for low carbon hydrogen (at most 7 kg of CO2 equivalent per kg of hydrogen) with a tax regime, Rehidro, that gives producers the REIDI suspensions on capex for projects habilitated within five years from 1 January 2025. On top, the PHBC program will award CSLL tax credits in competitive auctions for hydrogen sold from 2028 to 2032, capped at R$18.3 billion in total. Offshore wind has its own law since January 2025: seabed areas are granted by authorization or concession, against a signing bonus, an area fee and a share of energy revenue.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (the rate was R$5.5007 on 26 October and R$5.0377 on 23 October, so conversions move with the market). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Maximum life cycle emissions for low carbon hydrogen	7 kgCO2eq per kgH2Lei nº 14.948 art. 4 XII, as of 2026-10-27 · in force
Window to be habilitated in Rehidro, from 1 January 2025	5 yearsLei nº 14.948 art. 27, as of 2026-10-27 · in force
PHBC tax credit caps, 2028 to 2032 combined	18300000000 BRLLei nº 14.990 art. 4 § 1, as of 2026-10-27 · in force
Maximum PHBC credit as share of the price gap to substitutes	100 %Lei nº 14.990 art. 3 § 1, as of 2026-10-27 · in force
Maximum fine for non implementation of a PHBC project	20 % of creditLei nº 14.990 art. 4 § 10, as of 2026-10-27 · in force
Union share of the offshore proportional participation	50 %Lei nº 15.097 art. 14 II a, as of 2026-10-27 · in force

The rule

1. What counts as low carbon hydrogen. The framework defines low carbon hydrogen as hydrogen fuel or industrial input whose greenhouse gas emissions, on a life cycle basis, have an initial value of up to 7 kg of CO2 equivalent per kg of hydrogen produced. Renewable hydrogen is low carbon hydrogen from renewable sources, including biomass, ethanol and other biofuels, or natural hydrogen. Hydrogen production is authorized by the ANP for companies incorporated under Brazilian law with head office and management in Brazil.
Cost to do it: ANP production authorization; certification by an accredited certifier for sales as low carbon hydrogen.Lei nº 14.948 (low carbon hydrogen framework), Art. 4 items XII and XIII; art. 36 (adding item XXIII to Lei nº 9.427 art. 3), 2024-08-02 official text · verified 2026-10-27

2. Rehidro: capex tax relief. A company habilitated within 5 years from 1 January 2025 to produce low carbon hydrogen benefits from Rehidro; companies co habilitated for storage, transport, distribution or trading of the hydrogen, for renewable power generation or for biofuels used to make it may also join. Tax incentives last 5 years from 1 January 2025. Beneficiaries receive the REIDI benefits of Lei nº 11.488 arts. 3 to 5 (PIS and COFINS suspension on equipment, materials and services for the works), and debentures they issue to fund the projects qualify for the incentivized infrastructure debenture regime of Lei nº 12.431 art. 2. Regulation must require a minimum local content and a minimum R&D investment; Simples Nacional companies are excluded.
Cost to do it: Habilitação under the regulation, with local content and R&D investment commitments.Lei nº 14.948, Arts. 26 §§ 2 and 3, 27, 28 and 29, 2024-08-02 official text · verified 2026-10-27

3. Rehidro in the new consumption taxes. Since 2026 the REIDI suspension of IBS and CBS on machinery, equipment, construction materials and services for the works also applies to Rehidro beneficiaries, so the relief carries over as PIS and COFINS are replaced.Lei Complementar nº 214, art. 106 § 7 included by Lei Complementar nº 227 of 2026, Art. 106 § 7, 2025-01-16 official text · verified 2026-10-27 · changed: Lei Complementar nº 227 of 2026 extended the REIDI IBS and CBS suspension to Rehidro beneficiaries.

4. PHBC: auctioned tax credits. The Low Carbon Hydrogen Development Program grants a tax credit on sales of low carbon hydrogen and derivatives produced in Brazil from 1 January 2028 to 31 December 2032. The credit can cover up to 100 percent of the gap between the estimated price of the hydrogen and that of substitute goods, may fall as emissions intensity rises, and is set in a competitive procedure whose minimum award criterion is the lowest credit per unit of product. Producers must be or have been Rehidro beneficiaries, and buyers must buy from them. The credit is a CSLL credit that can offset federal taxes or be refunded within 12 months of the request.
Cost to do it: Prior project habilitação (the regulation must keep the window to 90 days or less) and, where the auction rules require it, a performance guarantee.
Example: Illustration only (the credit level is set by each auction): a green ammonia plant wins at a credit of R$5 per kg of hydrogen and sells 20,000 tonnes a year: R$100,000,000 of CSLL credit a year, usable against federal taxes. / About US$0.94 per kg and about US$18.7 million of credit a year.Lei nº 14.990 (PHBC), Arts. 3, 4 §§ 6 to 9, 5 and 6, 2024-09-27 official text · verified 2026-10-27

5. PHBC budget caps and penalties. Credits are capped at R$1.7 billion in 2028, R$2.9 billion in 2029, R$4.2 billion in 2030, R$4.5 billion in 2031 and R$5.0 billion in 2032; unused amounts roll forward. The Executive sets the amount actually offered within those caps, and it must be in the annual budget bill. Failing to implement the project, or implementing it in breach of the rules, triggers a fine of up to 20 percent of the credit that would have gone to the project and repayment of credits used.
Cost to do it: Exposure to a fine of up to 20 percent of the awarded credit if the project is not delivered.
Example: Total caps of R$18.3 billion over five years. / About US$3.43 billion in total; 2028 cap about US$319 million.Lei nº 14.990, Art. 4 §§ 1 to 4 and 10, 2024-09-27 official text · verified 2026-10-27

6. Offshore wind and other offshore power. The right to use federal offshore areas (inland waters, territorial sea, exclusive economic zone and continental shelf) to generate power is granted by authorization, under a permanent offer where interested parties propose areas, or by concession after a tender for pre delimited areas under a planned offer. Areas cannot overlap oil and gas blocks under contract, shipping or air routes, environmentally protected areas, listed landscapes or military exercise areas.Lei nº 15.097 (offshore power generation), Arts. 1, 2, 3 item I, 5 and 6 § 1, 2025-01-10 official text · verified 2026-10-27

7. Offshore government take. The tender and the grant must provide for a signing bonus (the amount offered), an annual area occupation fee in reais per square kilometer, and a monthly proportional share of the value of energy generated from commercial operation, at the percentage set in the tender. The bonus and area fee go to the Union; the proportional share is split 50 percent to the Union, 12.5 percent to the coastal states and 12.5 percent to the coastal municipalities hosting the grid connection, and 10 percent each to all states and all municipalities by their revenue sharing fund keys, and 5 percent to sustainable development projects for affected communities in the coastal municipalities.
Cost to do it: Signing bonus, annual fee per square kilometer and a revenue share percentage, each set in the tender.Lei nº 15.097, Arts. 13 and 14, 2025-01-10 official text · verified 2026-10-27

Year	Cap (R$)	About US$
2028	1,700,000,000	319 million
2029	2,900,000,000	544 million
2030	4,200,000,000	787 million
2031	4,500,000,000	844 million
2032	5,000,000,000	937 million
Total	18,300,000,000	3.43 billion

PHBC tax credit caps by year (Lei nº 14.990 art. 4 § 1); USD at R$5.3346

Worked example

A European developer plans a 300 MW electrolyzer in a northeastern port zone fed by onshore wind and solar. It incorporates a Brazilian company, seeks ANP authorization and habilitates in Rehidro before 1 January 2030, so equipment and construction materials for the plant come with PIS and COFINS suspended and, as the reform proceeds, IBS and CBS suspended (Lei nº 14.948 art. 28; LC nº 214 art. 106 § 7). It funds part of the capex with incentivized debentures (art. 29) and bids in the PHBC auction for credits on sales from 2028: at an illustrative R$5 per kg on 20,000 tonnes a year, that is R$100,000,000 (about US$18.7 million) of CSLL credit a year, at the risk of a fine of up to 20 percent of the credit if the plant is not delivered (Lei nº 14.990 art. 4 § 10). If the plant is in the SUDENE area and approved by 31 December 2028, the regional income tax reduction may also apply (see Foreign investment regime).

Step by step

1. Confirm the product meets the 7 kgCO2eq per kgH2 life cycle threshold and plan certification.
2. Incorporate the Brazilian project company (ANP authorization requires head office and management in Brazil).
3. Apply for Rehidro habilitação before the 5 year window from 1 January 2025 closes, with the local content and R&D commitments the regulation sets.
4. Prepare for the PHBC: project habilitação, then the competitive procedure; price the bid as credit per unit of product.
5. For offshore wind, follow the permanent offer route (propose an area for authorization) or the planned offer tenders, and model the signing bonus, area fee and revenue share.
6. Layer financing: incentivized debentures, regional incentives and development bank lines.

Common traps

Assuming the PHBC credit is automatic. It is awarded only through the competitive procedure and within yearly caps that must also be in the budget (Lei nº 14.990 art. 4).
Selling hydrogen before 2028 and expecting PHBC credits. Only sales from 1 January 2028 to 31 December 2032 qualify (art. 6).
Missing the Rehidro window. Habilitation must happen within 5 years from 1 January 2025 (Lei nº 14.948 art. 27).
Diverting Rehidro or REIDI items. Items not used in the works lose the suspension with interest and late fines (Lei nº 11.488 art. 3 § 3).
Picking an offshore area that overlaps oil and gas blocks, shipping routes or protected areas; such prisms cannot be granted (Lei nº 15.097 art. 6 § 1).

Sources

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