Law for the Promotion of Green Hydrogen in Peru

On March 23, 2024, Law No. 31,992, known as the “Law for the Promotion of Green Hydrogen”, was enacted in Peru, marking a fundamental milestone in the development of this industry in the country. This legislation establishes clear guidelines for the regulation and promotion of low-emission hydrogen, contemplating seven articles and three complementary provisions, which include the instruction to the Executive Power for the elaboration of the corresponding regulations.

In this context, the Peruvian Hydrogen Association (H2 Peru) promoted an international bidding process with the objective of developing the regulation of Law N°31.992. As a result of this process, the responsibility was awarded to our team of the Hydrogen Technologies Unit (UTH) of the Pontificia Universidad Católica de Chile. Last January 20, the result of the proposal has been officially delivered, which has a series of innovations.

Among the most relevant aspects of the proposal are the following:

Comprehensive Coverage of the Value Chain: Unlike regulation in other countries in the region, which tends to be segmented, the proposal under development covers all stages of the hydrogen life cycle, from production to final use, including conversion, storage and transportation. This comprehensive approach allows for a more coherent and harmonious framework, facilitating the consolidation of the industry.

Incorporation of International Experiences: References have been taken from various countries, including Chile, to ensure a robust regulation. A significant example is the inclusión of ammonia as a hydrogen energy carrier, allowing its regulation in advance and in a comprehensive manner.

Resource Diversification and Certification Strategy: The proposal recognizes Peru's comparative advantage in renewable energy and natural gas, allowing for a low-emissions definition of hydrogen. This approach, similar to that adopted by countries such as Canada and Australia, expands development opportunities for the industry and strengthens its competitiveness in international markets. In addition, certification criteria have been incorporated that establish a common taxonomy, facilitating the homologation and acceptance of Peruvian hydrogen abroad.

Promotion of Research and Development (R&D): Mechanisms have been identified to promote applied research in hydrogen technologies, with the objective of strengthening local capabilities and ensuring the long-term sustainability of the industry.

Identification of Regulatory and Fiscal Challenges: Limitations have been detected within the Peruvian legal framework regarding economic incentives to promote the hydrogen industry. Although these aspects cannot be solved exclusively through regulation, recommendations have been proposed in the areas of taxation and permitting, outlining possible legal paths and public policies necessary for their implementation.

Peru has a great window of opportunity to consolidate its position as a relevant player in the global energy transition. The existence of abundant energy resources is a key advantage, but their effective use requires coordinated actions that include adequate public policies, market activation, relations with communities and attention to environmental challenges. The prompt implementation of the regulation of Law N°31.992 will be a step in the right direction, although a continuous effort is required to consolidate a competitive and sustainable green hydrogen ecosystem in the country.

Peru's progress in the development of green and low-emission hydrogen will undoubtedly be a great contribution to the region, while enhancing the comparative advantages of our country. Finally, countries that have shown successful results in H2V have done so with strong public-private partnerships and international efforts of different nature. We must follow the same path.

Patricio Lillo

Member of the UC Energy Center

Department of Mining Engineering

Pontificia Universidad Católica de Chile