Brazil: Environmental Law Newsletter

CARBON MARKET

First Auction To Sell Carbon Credits In Brazil

On September 26, 2007, the Mercantile and Futures Exchange (BM&F) held its first auction for the sale of CERs (Certified Emission Reductions), i.e., carbon credits that are being generated as part of MDL, which is one of the flexibilization mechanisms provided for in the Kyoto Protocol.

In the auction, 808,405 carbon credits were sold, all of which had been generated under the methane burning project developed at the Bandeirantes landfill, which belongs to the Municipality of São Paulo. The winning bidder was Banco Fortis NV/SA that paid approximately 16.20 Euros per ton of carbon equivalents, in a total of approximately 13.096 million Euros.

Rio+15 Conference

With the purpose of discussing the positive and negative developments of the current global climate policy and also the evolution of the carbon markets, including voluntary markets and the ones regulated by the Kyoto Protocol, specialists from different institutions met during the Rio+15 Conference, which was held on September 19 and 20, 2007, in Rio de Janeiro.

During the conference, a number of representatives of the financial sector emphasized that political uncertainties and bureaucracy still hinder larger investments in projects of reduction/removal of greenhouse gases as part of the flexibilization mechanisms described in the Kyoto Protocol. In their opinion, the market still needs a consolidated regulatory framework, which could improve the forecast of risks involved in carbon credit operations.

The negotiations for the potential adoption of goals by emerging countries, such as China, India and Brazil were also commented during the conference. The Executive-Officer of the Inter-Ministry Commission on Climate Changes in Brazil, José Domingos Miguez, defended the standing adopted by the Brazilian government, which does not accept the imposition of mandatory goals as part of a new international treaty. His main argument is based on the principle of common, but differentiated responsibility for developing countries, which, historically, have had a lower degree of contribution to the global warming effect, and for developed countries, which should accept the larger part of the responsibility for the reduction of emissions.

LEGISLATION

FEDERAL



Establishment Of The Chico Mendes Institute For The Conservation Of Biodiversity

After the strike affecting IBAMA and lengthy discussions, the new authority in charge of the conservation units under the responsibility of the Federal Government was formally established by Law No. 11516/07, which resulted from Provisional Measure No. 336/07. The Chico Mendes Institute for Conservation of Biodiversity is a federal independent agency of public law, with administrative and financial autonomy, connected to the Environment Ministry.

The new agency has incorporated certain duties that used to fall under the jurisdiction of IBAMA, including (i) the proposal, implementation, management, protection and inspection of conservation units established by the Federal Government; (ii) the enforcement of policies relating to the sustainable use of natural resources and to the support of gathering activities and native populations in sustainable conservation units instituted by the Federal Government; (iii) the support and enforcement of programs of research, protection, preservation and conservation of biodiversity and environmental education; (iv) the exercising of environmental policy authority to protect the conservation units instituted by the Federal Government, which does not preclude IBAMA's authority; and (v) the support and enforcement, together with the other agencies and entities, of public recreational programs and eco-tourism projects in conservation areas, where such activities are allowed.

First Bidding For Forest Concession In Public Areas

The Jamari National Forest, a federal self-sustainable conservation unit located in the State of Rondônia, has 220 thousand hectares, of which 90 thousand hectares will be subject to a forest concession to be granted by means of a public bidding and in exchange for the payment for the use of forest resources, according to Law No. 11284/06, which governs the management of public forests, seeking to achieve a state of sustainable production.

The 90 thousand hectares will be divided into small, medium and large areas, which will be subject to separate biddings and different rules. The remaining areas of said conservation unit will be used in compliance with the provisions set forth in the Management Plan of the Jamari National Forest, which was approved by IBAMA in 2005. The publication of the official version of the bidding rules was expected to take place on October 31, 2007.

Law No. 11284/06 establishes, as the criteria for the definition of the winning bid, the highest price offered as payment to the granting authority in exchange for the forest concession and the best technique, considering (i) the lowest environmental impact; (ii) the greatest direct social benefits; (iii) the greatest efficiency; and (iv) the higher value added to the forest product or service originating from the concession area.

The deadlines for qualification under the bidding procedure after the publication of the bidding rules and for the submittal of the bids are November 23, 2007 and December 15, 2007, respectively. The execution of the forest concession agreement is expected to take place in March 2008.

SP

Creation Of The Strategic Project Of Zero Deforestation

The purpose of Ordinance SMA No. 40, of September 21, 2007, which deals with the implementation of the Strategic Project of Zero Deforestation is to ensure the preservation of the remaining native vegetation in the State of São Paulo, by means of the improvement of environmental licensing procedures and inspection, in addition to the establishment of management mechanisms subject to periodic evaluation.

In order to actually achieve such goal, the granting of authorizations for the suppression of native vegetation in the territory of the State of São Paulo has been temporarily suspended in cases where (i) the area in question is a refuge for animals or plants under risk of extinction, in national or state territories, as stated by the Federal or State Government, and the intervention or activity endangers the survival of such species; (ii) the area includes fragments of the ecosystems known as cerrado and cerradão and native forests that are part of the Atlantic Forest Biome, under medium and advanced stages of recovery; and (iii) the property is subject to environmental liabilities, represented by an unresolved environmental infraction notice or irregular occupation of a permanent conservation area – APP.

Said suspension is not applicable to the cases described in Ordinance CONAMA No. 369/06, which deals with exceptional cases, areas of public utility, social interest or low environmental impact, where interventions and the suppression of vegetation in APP is allowed, provided that the party submits evidence proving that there is no other technical or location alternative. The suppression of individual native trees is still governed by the specific procedures defined in Ordinance SMA No. 18, of April 11, 2007.

The criteria relating to the Strategic Project of Zero Deforestation will be revised, and new guidelines will be established for the granting of authorizations for the suppression of native vegetation in each biome, within 180 days as of the date of publication of Ordinance SMA No. 40/07, by means of the enactment of a specific ordinance.

RJ

Establishment Of The State Environmental Institute (INEA)

State law No. 5101, of October 4, 2007 established the creation of the State Environmental Institute - INEA. The new environmental agency in Rio de Janeiro will bring together the State Engineering and Environmental Foundation - FEEMA, the State Superintendence of Rives and Lakes - SERLA and the State Forest Institute Foundation - IEF. Additionally, the INEA law also authorized the offering of a public examination by the end of the year, with the purpose of increasing, by next January, the number of capacitated employees in the new environmental body. With the creation of INEA, the State Environmental Office intends to improve the efficiency of environmental licensing processes by simplifying the stages of such processes and, consequently, putting an end to bureaucracy and corruption. The project also calls for the delegation of the licensing of enterprises with small and medium environmental impact to the municipalities that have the necessary technical and institutional means. Furthermore, INEA is expected to increase the effectiveness of environmental inspections in the State of Rio de Janeiro.

MT

New Normative Ruling About Environmental Licensing In Rural Properties

The State Environmental Office, by means of Normative Ruling No. 1, of July 6, 2007, instituted the rules to govern the new technical and administrative procedures relating to the environmental licensing in rural properties in the State of Mato Grosso and expressly revoked Normative Ruling No. 5, of November 24, 2006.

Normative Ruling 1/07 deals with the authorization for the location, implementation and operation of deforestation activities and exploration and agricultural or animal farming projects, by means of the issue of the Unified Environmental License (LAU). Said Normative Ruling also deals with annotations of legal reserves.

The most relevant change was the possibility of environmental licensing of excess land under the property records, up to the limit of plus or minus 1/20 (5%) of the total area of the rural property, subject to a limit of 150 ha. With such change, said areas will no longer be considered areas under possession, as they used to be under the revoked Normative Ruling No. 5/06, which stated that all excess land under a property record was required to be licensed as such.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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