On February 13, 2012, the Brazilian Ministry of the Environment (Ministério do Meio Ambiente – MMA) and the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social – BNDES), launched the lines of credit for the Brazilian Climate Change Fund Program (the "Climate Fund"). The aim of the Climate Fund is to provide support for projects related to efforts aimed at reducing greenhouse gas emissions and in adapting to climate change and it is one of the main instruments in the Brazilian climate change policy. It is expected that up to 2014 these resources may reach R$ 1 billion.

The resources which form the Climate Fund come from the 60% portion of the Special Participation of Oil (Participação Especial do Petróleo), received by the MMA. Such resources are split into two modalities: (i) reimbursable, which will be operated by BNDES; and (ii) non-reimbursable, which is to be directly managed by the MMA1.

This new program seeks to encourage relevant investments so that Brazil may reach its targets in terms of reducing greenhouse gas emissions, established in the Brazilian Policy on Climate Change (Política Nacional sobre Mudança do Clima), reduce its vulnerability to adverse effects of climate change, and prepare to compete in a low-carbon economy.

The new lines of credit, aimed at encouraging private, municipal and state investments, deemed more efficient in terms of the climate, have more attractive interest rates than those currently applied by BNDES. The new rates vary according to the sub-programs, starting at 2.5% p.a. Terms of loans, also variable depending on the application, can reach up to 25 years, which is the maximum term for undertakings in urban railway transport. The participation of BNDES may reach 90% of the eligible items in all the sub-programs.

The sub-programs include: (i) efficient transport modals, aimed at projects that contribute to reducing greenhouse gas emissions and local pollutants in collective urban passenger transport, as well as improvements in urban mobility in metropolitan regions; (ii) efficient machinery and equipment, to finance new and nationally-produced machinery and equipment with higher energy efficiency; (iii) renewable energy, aimed at energy generation using wind power in isolated systems, using biomass, from oceans and solar radiation, besides technological development projects and the production chains within these sectors; (iv) waste with energy potential, to support projects that structure urban cleaning and waste deposits to generate energy in cities that are to host the 2014 World Cup or in metropolitan regions; (v) vegetal charcoal, earmarked for investments aimed at improving energy efficiency in the production of vegetal charcoal; and (vi) combating desertification, aimed at projects for restoring biomes and sustainable production activities involving native timber, fiber and fruits in the Northeast region.


1. In 2011, R$ 230 million was earmarked for the two modalities. Of this amount, R$ 30 million was for non-reimbursable, which became effective 2011, and R$ 200 million for the reimbursable modality, which will be made available as of now, with the launch of the lines of credit. For 2012, the reimbursable portion will total R$ 360 million.

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