The implementation of a carbon adjustment mechanism in the European Union, with the charging phase starting in 2026, tends to accelerate the demand for low-emission products, creating a window of opportunity for Brazilian exporters.
The assessment comes from a recent study by the Brazilian Green Hydrogen Industry Association (ABIHV), which sees a favorable international outlook for biofuels and green fuels.
The so-called CBAM (Carbon Border Adjustment Mechanism) applies a carbon price to imports of emission-intensive goods, aligning them with the carbon cost in the European market (EU ETS).
To transform comparative advantages into effective competitiveness, ABIHV recommends reducing the cost of capital for projects through policies to mitigate regulatory and exchange rate risk; advancing the implementation of a regulated carbon market that prices emissions and rewards low carbon intensity; and fostering integrated industrial hubs for hydrogen and derivatives, connecting renewable generation, molecule production, and final demand at scale.
The association notes that, among biofuels, Brazilian sugarcane ethanol shows price stability and good energy density, establishing itself as a low-carbon option that is competitive with fossil fuels in the short term.
Green fuels, such as hydrogen, ammonia, and methanol, currently have higher energy costs, but are projected to see significant reductions by 2030, with the cost of hydrogen falling from US$3.97/kg to US$1.85/kg.
This trend stems from the drop in electrolysis capex (from around US$1,000/kW to US$400–600/kW) and the reduction in the cost of renewable electricity, which today accounts for up to 70% of the molecule’s total cost.
“In summary, the 2026 outlook confirms the gradual transition from a low-cost yet carbon-intensive matrix to an emerging scenario in which clean molecules gain competitiveness, driven by technological advances, climate regulation, and the expansion of carbon markets,” says ABIHV.
The association estimates that a carbon price of around US$100/tCO₂ will be needed to substantially reduce the gap between fossil and renewable molecules. This would bring green hydrogen closer to grey hydrogen, obtained mainly from natural gas, allowing green ammonia and methanol to compete for space in segments such as fertilizers, maritime transport, and the chemical industry.
“In this configuration, the “green premium” ceases to be an insurmountable barrier and becomes a residual difference that can be covered by well-designed regulatory and contractual instruments”, concludes ABIHV.
According to the association, the planned investments for green hydrogen projects with a final investment decision (FID) between 2026 and 2029 amount to more than 100 billion reais (US$20bn). The projects basically envisage the use of wind or solar power to produce the low-carbon fuel.
(The original version of this content was written in Portuguese)
