Brazil leading the path toward energy transition
The urgent need to tackle climate change means that moving toward the energy transition is not merely a strategic choice but an inevitability. Governments, institutions, and corporations have ramped up discussions on how to speed up this transition in a way that is viable and sustainable in the long term.
Brazil has everything it needs to be a key strategic player in the energy transition – abundant natural resources, a predominantly clean energy matrix, and strong potential for generating renewable energy (such as wind and solar).
To that end, legal certainty and regulatory stability are essential for further increasing the engagement of both companies and investors in the Brazilian energy market. In November 2024, Brazil’s Congress approved a bill to regulate the local carbon market, establishing the Brazilian System for Greenhouse Gas Emissions Trading (SBCE). This was preceded a few months earlier by a legal framework to regulate low-carbon hydrogen that includes incentive mechanisms for the sector. As such, it is clear that the topic is increasingly being seen as a priority in the agendas of the Brazilian legislature, which has a core role to play in ensuring Brazil can leverage its potential in the context of the energy transition.
Partner Giovani Loss suggested that although important progress has been made in regard to the energy transition, issues within the established legal frameworks that are crucial to the energy sector having a clearer view of the impacts still await regulation. According to him, one of the main pieces of legislation passed was the Future Fuel Law (Law No. 14,993/2024), which established incentive programs for SAF, green diesel, biomethane, and synthetic fuels, as well as providing provisions on the geological storage of carbon dioxide. However, implementing the programs provided for by the law depends on yet-to-be-issued regulations from bodies such as the ANP, ANAC, and CNPE.
According to partner Antonio Augusto Reis, Law No. 15,042/2024 (establishing the Brazilian Greenhouse Gas Emissions Trading System – SBCE) does not provide all the necessary rules to make the system effectively operational, nor does it provide for extremely important issues such as who will act as the system’s managing body and the acceptable carbon credit methodologies within the SBCE. It will be crucial for companies to closely monitor developments in this regard and actively participate in discussions (if deemed pertinent) around the regulation of the law. Companies will also have to conduct an emissions inventory in advance to understand if they will be subject to obligations arising from the new legislation that, according to Articles 29 and 30 of Law No. 15,042/2024, apply to sources and facilities that emit more than 10,000 tonnes of CO2 equivalent per year.
Partner Luiz Felipe Di Sessa also argued that strategic use of intellectual property is fundamental for companies seeking to position themselves at the forefront of the energy transition. The challenge of balancing new technologies developed via proprietary projects aimed at ensuring a unique competitive advantage and open innovation initiatives – which often seek to collaborate with the market or test interactions with third-party solutions – has become an increasingly significant factor for players in this sector. In an ever-evolving market, intelligently applying resources to discover new energy sources and increase the efficiency of existing sources can make a decisive difference.
Furthermore, for partner Bruno Chedid, the legal framework for low-carbon hydrogen (Law No. 14,948/2024) and the Low-Carbon Hydrogen Development Program (Law No. 14,990/2024) now provide a basic legal structure for implementing low-carbon hydrogen projects, in addition to industry incentives either through tax exemptions or credits granted for the sale of low-carbon hydrogen.
Companies responsible for sources and facilities emitting above this threshold will have to submit a monitoring plan and an emissions and removals report, while those responsible for sources and facilities that emit above 25,000 tonnes of CO2 equivalent per year will have to periodically submit an emission reconciliation report. This report must demonstrate that the company meets SBCE-linked environmental commitments via the ownership of assets contemplated within the SBCE in an amount equal to the company's net emissions
Antonio Augusto Reis
Partner
Despite still requiring regulation, both Law No. 14,948/2024 and Law No. 14,940/2024 establish more legal certainty for projects and provide better visibility of the specifics of the Brazilian market, the main stakeholders involved in regulation, and the supervision of regulated activities – not to mention the guidelines of the low-carbon hydrogen certification system, essential for this industry. Brazil has the potential to be a leader in low-carbon hydrogen production via different technological routes, especially given the abundance of renewable energy at competitive prices, a green grid, access to water, enormous potential for biogas production, proximity with European markets, a potential domestic consumer market, and a stable legal system
Bruno Chedid
Partner
2024 saw the enactment of the legal framework for low-carbon hydrogen (Laws No. 14,948/2024 and No. 14,940/2024) and the MOVER Program (Law No. 14,902/2024), which seeks to stimulate decarbonization within the automotive sector. In this regard, the BNDES [Brazilian Social and Economic Development Bank] still needs to determine certain measures for the National Industrial and Technological Development Fund (FNDIT) to become operational. Other important laws approved in 2024 but signed into law only in 2025 include Law No. 15,097/2025, which governs the installation of offshore wind energy parks (still awaiting regulation), and Law No. 15,103/2025, which establishes the Energy Transition Acceleration Program (Paten). Regarding the latter, the criteria for the Ministry of Mines and Energy to assess projects and criteria for the BNDES to distribute credits still need to be defined. In the field of environmental law, Law No. 14,904/2024 was approved to establish development guidelines for climate change adaptation plans. The plans themselves, however, still need to be developed by the competent federal agencies
Giovani Loss
Partner
Increasingly, companies are also taking advantage of regulatory and legal incentives for research and protecting innovation in this market. A clear example is the "Green Patents" program created by Brazil's Trademark and Patent Office (INPI), which aims to expedite examinations of patent applications related to environmentally focused technologies. From a sectoral perspective, ANP Resolution No. 918/2023 regulates the fulfillment of investment obligations provided for in the research, development, and innovation clauses of oil and natural gas exploration and production contracts, with the aim of boosting scientific and technological progress in the sector, fostering innovative solutions, and expanding the local content of goods and services. New incentives are expected to emerge as a result, which should certainly contribute to the development of knowledge necessary for a safe, sustainable, and innovative energy transition
Luiz Felipe Di Sessa
Partner
