(Bloomberg) -- Brazil President Luiz Inacio Lula da Silva approved legislation establishing a legal framework for low-carbon hydrogen, but vetoed language that would have granted certain tax credits.
The framework, which takes effect Jan. 1, seeks to attract and encourage investment in the production of low-carbon hydrogen and its derivatives, increasing Brazil’s competitiveness in the international market, according to an extra edition of the Official Gazette published Friday.
In a message to the president of the Senate, Rodrigo Pacheco, Lula said he consulted the Finance Ministry and the chief of staff, and both expressed support for the veto.
“Despite the good intentions of the legislator, the provisions go against the public interest by establishing incentives that violate concepts established in the financial and budgetary legislation and generate inaccuracies that create legal uncertainty,” Lula wrote.
Green hydrogen may allow Brazil to transition away from an oil industry that’s set to start declining in the 2030s. Brazil is capable of making the cheapest green hydrogen in the world excluding subsidies, according to BloombergNEF.
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