New project of the National Regime Law for the promotion of hydrogen

What is hydrogen?

Hydrogen is the simplest and most abundant element on the planet. But it is not found in a pure state, it is combined with other elements forming, for example, hydrocarbons and water. Therefore, it cannot be taken directly from nature, rather it is an energy vector that must be obtained by breaking the molecules of different compounds.
According to the way it is obtained and the level of greenhouse gases (GHG) emitted in the process, we can find different categories of hydrogen. The best known are:

• Gray hydrogen: it is obtained from fossil fuels (generally natural gas). It is the most polluting since large amounts of carbon dioxide are released during treatment.
• Blue hydrogen: it also generates CO₂ emissions, but this is captured using CCUS (Carbon Capture, Use and Storage) technology to be stored or re-used.
• Green hydrogen: through the use of renewable energy, electrolysis is generated in the water and the hydrogen molecules are extracted in this way, releasing very little or no GHG emissions.

Hydrogen is widely used in industry for the synthesis of ammonia, oil refining and hydrogenation of vegetable oils, among others. Being highly flammable, it can produce up to three times more energy than fossil fuel. Therefore, although it is an incipient technology, it is considered that it could be an interesting alternative as a fuel for transportation, domestic and industrial use, and electricity generation.

How is green hydrogen produced?

There are different methods of obtaining it, although they all have one factor in common: the use of renewable energy sources to carry out the processes. The main one is electrolysis, which uses electrical energy to break down fresh water molecules into oxygen and hydrogen.

This process is exempt from GHG emissions not only during its production, but also during its use. When hydrogen is transformed into electrical energy through the use of batteries or fuel cells, it  emits only water.

In Argentina there are two large projects in Patagonia, which seek to produce green hydrogen using wind power as an energy source, taking advantage of the quality of the wind in the region.

Are there regulations for production?

In August 2006, Law 26.123 for the promotion of hydrogen was passed. In this bill the development of technology, production, use and applications of hydrogen as a fuel and energy vector was declared to be of national interest. But since its article 21 stipulated a term of 15 years, the law expired in 2021.

Currently, a new project of the National Regime Law for the promotion of hydrogen is being discussed. The bill promotes "research, innovation, development, production, export and use of hydrogen of renewable origin as fuel and energy vector and as an input for chemical and industrial processes" and grants one year for the Executive Power to approve the National Hydrogen Strategy 2030.

This new bill also establishes that energy projects that make up the National Hydrogen Promotion Regime will enjoy promotional benefits for 20 years -in relation to Value Added Tax (VAT), Income Tax, deduction of financial burden of financial liabilities and imports, among others-, in addition to fiscal stability.

Gabriel Righini, Audit Partner and Lead for the "Energy and Natural Resources" industry at Grant Thornton Argentina, comments: "Our country has a history of being at the forefront of energy developments, especially in oil and gas. Currently, we have an opportunity to achieve energy self-sufficiency using a combined matrix of available sources and also think, in the medium term, of being exporters. In this sense, investing and developing clean energy such as green hydrogen can help to resume the path of innovation and growth, taking care of our planet at the same time."

If you need the support of our experienced professionals in the challenges and opportunities of the energy sector, contact us.