Brazil: Bioenergy in the SESG context

Brazil may currently have no official overarching criteria or guidance for businesses seeking to align their practices with SESG (sustainability, environmental, social and governance) practices and strategies, but significant steps are being taken across the country to move toward a low-carbon economy.

SESG is a term which is increasingly used in business circles to refer to good business practices that focus on reducing negative impacts and generating positive impacts on the environment and society; SESG practices also can provide a framework for analyzing investment risks.  

The adoption of initiatives supporting an SESG agenda has been recognized as a way to bring considerable benefits to organizations, by adding value, strengthening competitiveness, furthering business continuity, and reducing risks and costs – as well as making the organization part of a larger societal collaboration around the sustainable development of economic activities.

Several initiatives have been adopted in Brazil which focus on the SESG agenda.  In this alert, we focus on SESG’s E element – the sustainable use of environmental resources, such as measures aiming to reduce greenhouse gas emissions; the appropriate management of waste; energy efficiency; and eco-efficiency, the optimization of products and processes – as well as the gradual elimination of the use of fossil fuels and their replacement with renewable sources.

Most notably, the transition to a renewable energy matrix is set out in Brazil’s National Policy on Climate Change (PNMC) and its regulation.  This policy established the creation of sectoral plans to mitigate and adapt to climate change; aimed to expand the supply of alternative renewable sources; and created the Decennial Energy Expansion Plan (PDE), a specific sectoral plan for the energy generation and distribution sectors. The latest version, PDE 2029, forecasts that by 2029, renewable energy in the Brazilian matrix will have grown 48 percent above figures for 2019.  Of that, 19 percent is expected to be produced from biomass sources (bioenergy or bioelectricity).

Bioenergy production has also been encouraged and regulated from the legal standpoint, by means of several rules at the federal and state levels.

At the federal level, in 2011, the National Energy Policy was amended to include an incentive for energy generation from biomass and by-products of biofuel production (such as biodiesel and ethanol). Also in 2011, the National Policy of Solid Waste was enacted, providing as one of its objectives the incentive for reuse of solid waste to energy generation purposes.

In 2017 the National Biofuel Policy (RenovaBio) was created, which has as one of its foundations the importance of adding value to Brazilian biomass.  RenovaBio sets out criteria for Biofuel Certification, which measures and evaluates the role of energy efficiency and greenhouse gas emissions in a biofuel’s life cycle. Producers of biodiesel, biomethane, and ethanol generated from sugarcane and corn are eligible for this certification.

In 2020, Brazil saw important legislative advances at the federal level, most notably:

• the approval of Legislative Bill No. 476/2020, known as the New Gas Law, which provides incentives for projects to generate biogas and biomethane from landfills and organic waste and
• the approval of the legal framework for sanitation, established by Federal Law No. 14,026/2020, which aims to guarantee greater access to sewage collection and sewage treatment systems. This framework is intended to expand the number of sewage treatment plants and, in turn, to increase opportunities for the use of biomethane and biogas for energy generation.

At the state level, at least 12 states have also issued public policies to encourage the production and enhancement of a sustainable energy matrix, including bioenergy, providing financial, credit and tax incentives for such activities. In some states, this incentive is also given through specific public policies related to the production of biomass to generate bioenergy from the use of reforested areas – as in Piauí, Rio Grande do Sul and Rondônia – or within the scope of public policies connected to climate change, as in Rondônia and Mato Grosso do Sul states. The states of São Paulo, Santa Catarina, Rio Grande do Sul, Paraná and Goiás have created specific policies to encourage the production of biogas and biomethane, in order to enhance the generation of energy from biomass.

In addition to such public policies, other state regulations grant special conditions for environmental licensing of activities related to bioenergy generation.

Going forward, we expect to see these policies, regulations and initiatives expand as Brazilian organizations seeking to advance their SESG agenda and to contribute to the transition to a clean and sustainable energy matrix.

*Rafael Bussière is a partner and Gabriela de Carvalho e Mello is an associate in independent Brazilian law firm Campos Mello Advogados in cooperation with DLA Piper.