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3 January 2023

Provisional Measure Paves Way For Development Of Carbon Credit Projects And Other Environmental Services Through Concessions Of Conservation Units

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On December 27, the Brazilian Presidency issued Provisional Measure No. 1,151/2022, which, among other provisions, amended Laws No. 11,284/2006 (Public Forests Management Act)...
Brazil Environment
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On December 27, the Brazilian Presidency issued Provisional Measure No. 1,151/2022, which, among other provisions, amended Laws No. 11,284/2006 (Public Forests Management Act) and 11,516/2007 (ICMBio Creation Act) to enable the development of carbon credit projects and other environmental services in conservation units, through concessions.

Preexisting Regulatory Framework

In general, the preexisting regulatory framework made it impossible to develop carbon credit projects through concessions in conservation units. The Public Forests Management Act prohibited the granting of rights to market credits for avoided deforestation of natural forests, making it impossible to develop REDD+ projects in forest concessions. In addition, the ICMBio Creation Act's only clear provisions on the concession of conservation units were provisions for tourism purposes.

Changes with the New Provisional Measure

In this context, and in line with the federal government's recent initiatives to promote carbon credit markets in Brazil, the new Provisional Measure not only revokes the previously existing prohibition in the Public Forests Management Act but also introduces provisions, both in that law and in the ICMBio Creation Act, stating that the concession of conservation units may be used for the development of carbon credit projects and other environmental services.

Therefore, the Public Forests Management Act now provides that forest concessions can contemplate the exploitation of non-logging forest products and services, including projects for the conservation of native vegetation and avoided deforestation (REDD+) and for afforestation, reforestation and revegetation (ARR), among others. The ICMBio Creation Act, in turn, now provides that the concession of services, areas or facilities of conservation units may also include the right to develop and market carbon credits and other environmental services.

In addition to those changes, the Provisional Measure also introduces adjustments to the legislation dealing with environmental licensing of forest concessions, rules for the respective bidding, the classification of certain environmental assets as financial assets and their accounting, among others.

Timetable

The Provisional Measure came into force on December 27, the date of its publication, and, in 2023, it will go through relevant legislative procedures for its eventual conversion into law.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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