HYDROGEN PRODUCTION PATHWAYS IN BRAZIL: a comparative techno-economic and policy assessment of electrolysis and ethanol steam reforming

Abstract

This article presents a comparative techno-economic and public policy assessment of the main hydrogen production pathways in Brazil: water electrolysis powered by renewable electricity and ethanol steam reforming. The country represents a unique case in the international energy landscape by combining a predominantly renewable electricity matrix with a mature and competitive bioenergy sector centered on sugarcane ethanol. The analysis adopts an engineering economics framework based on the Levelized Cost of Hydrogen (LCOH), decomposing capital costs, operating costs, energy inputs, and financial parameters. Sensitivity analyses are conducted for electricity and ethanol prices, capital costs, discount rates, and utilization factors, with the objective of translating technical assumptions into policy-relevant scenarios. The results indicate that ethanol steam reforming tends to exhibit lower costs in the short to medium term due to the high share of feedstock costs and lower capital intensity. Water electrolysis, in turn, becomes progressively competitive under scenarios of low-cost renewable electricity and declining electrolyzer CAPEX. The study concludes that a national strategy based on the coexistence of technological pathways, supported by coordinated regulatory instruments, can enhance the robustness and efficiency of Brazil’s transition toward a hydrogen economy.