A planned reform of Brazil’s regulatory framework for environmental licensing could unlock energy projects in the country, according to lawyers interviewed by BNamericas.
Among the potential beneficiaries of the bill, currently under review in congress, are electricity transmission lines, gas pipelines, and oil and gas exploration and production.
One of the most well-known cases is the licensing process for drilling in the Foz do Amazonas basin, which has been under review by environmental licensing authority Ibama for years.
Another example – which advanced after more than a decade of setbacks – is the Tucuruí transmission line, which will connect Roraima state to the national power grid.
However, the proposal has sparked strong opposition from environmentalists and has been criticized by the environment ministry (MMA).
Experts who spoke to BNamericas do not rule out legal challenges if the bill is approved.
João Pedro Ribeiro Assis, partner at Lobo de Rizzo Advogados
“The proposal has the potential to help solve the long-standing disconnect between planning in the power sector and the environmental licensing of strategic projects in Brazil.
“An interesting example is the provision to prioritize environmental licensing for the construction of transmission lines, provided certain requirements are met and the projects are part of sectoral planning. Initiatives like this can accelerate both the ongoing energy transition and efforts to address systemic reliability challenges brought about by the expansion of renewables – such as curtailment issues.
“One of the lots in the transmission auction scheduled for October, for instance, is focused on building lines in the states of Rio Grande do Norte and Ceará, precisely to ease curtailment issues. If project implementation can be accelerated under the licensing procedures outlined in the proposal, the benefits are undeniable and highly significant for the power sector, as well as for broader infrastructure development.”
Maria Christina Gueorguiev, partner at Veirano Advogados
“The new framework is expected to bring faster and less bureaucratic processes for power and infrastructure projects, with provisions for prioritizing licensing for developments considered strategic to the country.
“In addition, aligned with Brazil’s climate policy, emergency works and interventions in response to infrastructure collapse, accidents or disasters would be exempt from licensing requirements.
“The bill also states that registration in the rural environmental registry (CAR) cannot be required as a condition for licensing infrastructure or energy projects located on rural property if they are unrelated to agricultural activities. This has the potential to unlock several projects not directly tied to land use, such as power transmission and gas pipelines.
“It is possible that some provisions in the final approved text may face constitutional challenges, particularly regarding the license by adhesion and commitment (LAC). There may also be future legal disputes about how the new rules are interpreted and applied by environmental authorities.
“Investor expectations are that oil exploration projects will be included among those deemed strategic and prioritized by the government. If so, the licensing bill could improve the viability of projects in the Foz do Amazonas, provided environmental conditions established during the licensing process are met.”
Thiago Pastor, partner at Rolim Goulart Cardoso Advogados
“The bill has a positive aspect, enabling faster environmental licensing processes for several types of projects. On the other hand, there is concern that if projects classified as having significant polluting potential go through simplified procedures, this could increase legal disputes if such processes are deemed inappropriate by the responsible environmental agency.
“It is essential to align the type and impact of each project with the appropriate licensing procedure, and to be cautious with some of the terms included in the proposal. Otherwise, it could be misused – even unconstitutionally – to simplify licensing for large-scale, high-impact projects that should undergo more rigorous review.
“In theory, simplifying procedures, shortening review timelines, and introducing clearer licensing rules under the bill could benefit oil and gas projects, particularly smaller-scale or lower-impact ones.
“The bill also includes a provision to prioritize the review of projects related to national energy security. However, in compliance with constitutional rules, the proposal still requires an environmental impact study and report (EIA/RIMA), as well as other specific measures such as public hearings and environmental compensation for activities that cause or may cause significant environmental degradation.”