New federal regulations on climate change are approved in Brazil
In brief
In the last fortnight of 2024, two new regulations were enacted concerning climate change adaptation and mitigation in Brazil.
These are: (i) Federal Decree No. 12,309/2024, which provides financial support for the recovery of infrastructure in areas affected by extreme weather events, and (ii) Resolution No. 223/2024 of the Brazilian Securities and Exchange Commission (CVM, in Portuguese), which makes it mandatory for publicly traded companies to comply with Technical Guideline OCPC 10 concerning the accounting treatment applicable to Carbon Credits, CBIOs and allowances.
Additionally, the Brazilian National Congress approved Complementary Bill No. 68/2024, which regulates Constitutional Amendment No. 132/23 (“Tax Reform”), introducing incentives for “forest products”.
More details
On December 13, 2024, Federal Decree No. 12,309/2024 was published.
The decree regulated Provisional Measure No. 1,278/2024, which authorizes the Federal Government’s participation in a fund aimed at supporting the requalification and recovery of infrastructure in areas affected by extreme weather events, as well as infrastructure projects related to mitigating and adapting to climate change.
To this end, the mentioned decree regulated the creation of a private fund, administered by Caixa Econômica Federal (CEF, in Portuguese), whose resources may be invested in: (i) studies, projects and works for the rehabilitation and reconstruction of public infrastructure in areas affected by extreme weather events; (ii) studies, projects and works for infrastructure projects related to climate change mitigation and adaptation; and (iii) other activities relevant to the feasibility of studies, projects and works, as established by the fund’s Management Committee, which is made up of representatives from bodies such as the Civil House, the Ministry of Cities and the Ministry of Finance and is responsible for establishing criteria for the application of resources, approving execution plans and reports, and ensuring control and transparency mechanisms.
On December 16, 2024, CVM Resolution No. 223/2024 was published, which approved and made it mandatory for publicly traded companies to comply with “Technical Guideline OCPC 10 – Carbon Credits, Emissions Allowances and Decarbonization Credits (CBIO)”, issued by the CVM’s Accounting Pronouncements Committee.
The Technical Guideline determines that publicly traded companies must comply with specific requirements when originating, acquiring, bookkeeping and trading the aforementioned assets to meet decarbonization targets. The purpose of the Technical Guidance is to regulate the accounting methods and interpretations applicable to the recognition and measurement of assets and liabilities related to carbon credits, allowances or CBIOs, without, however, opining on issues with tax and/or legal nature. The new CVM Resolution No. 223/2024 came into force on January 1, 2025.
Finally, on December 17, 2024, the National Congress approved the basic text of Complementary Bill No. 68/2024 (PLP No. 68/2024), which regulates the Tax Reform in Brazil. See more details here.
The approved text of the bill, which establishes the Tax on Goods and Services (IBS, in Portuguese), the Social Contribution on Goods and Services (CBS, in Portuguese) and the Selective Tax (IS, in Portuguese), as well as the creation of the IBS Management Committee, provides for a 60% reduction in the IBS and CBS rates levied on the supply of forest products. According to the approved text, “forest products” include environmental services for the conservation or recovery of native vegetation.
In addition to the rate reductions for forest recovery and conservation services, PLP No. 68/2024 stipulates the imposition of the IS on the production, extraction, sale or import of goods and services harmful to health or the environment, which includes vehicles, aircraft and vessels, as well as mineral goods.
Our multidisciplinary carbon team is available to provide further clarification.
