On December 22, the Brazilian Ministry of Mines and Energy (MME)
published Normative Ordinance No. 56/GM/MME, revoking its
predecessor Ordinance No. 419/GM/MME after a public consultation
process conducted between March and May 2022 on revising the rules
for bookkeeping, registration, negotiation and retirement of
Decarbonization Credits (CBIOs).
In general, as already expected based on feedback from the public
consultation, most of the provisions contained in the now-void
Ordinance No. 419/GM/MME were maintained in the new regulation.
However, specific provisions have been introduced to ensure better
monitoring of transactions involving CBIOs and to increase
liquidity in the market.
New Provisions
Among these new provisions, the new regulation provides that the
MME and its affiliated agencies may request that registration
agencies provide data on each CBIO transaction "for the
purpose of assessing any distortions to the economic order
practiced in the Decarbonization Credits market." In addition,
the ordinance now requires that registration agencies segregate
"Regulated Entities" from "Non-Regulated
Entities" in the daily reports regarding the quantity,
financial volume and price of the traded CBIOs and in the daily
reports of retired CBIOs. Previously, such segregation was only
required when reporting the amount of CBIOs held by each
entity.
Another change is the creation of an exception to the rule of
non-identification of parties involved in CBIO transactions:
financial institutions trading directly with primary issuers and
buyers, whether for contracting over-the-counter derivatives or for
futures trading, may be identified.
Lastly, the new regulation requires registration agencies to report
CBIO retirement requests in an automated manner, through an
electronic system to be chosen by the Brazilian National Petroleum,
Natural Gas and Biofuels Agency (ANP), and to report retired
positions of Regulated Entities. Previously, this was the
responsibility of bookkeepers, who were responsible for submitting
quarterly reports to ANP in connection with CBIO retirements by
Regulated Entities.
Entry into Force
The new requirement for segregating "Regulated Entities"
from "Non-Regulated Entities" in daily reports shall
enter into force on June 1, 2023. All other provisions shall come
into effect on January 2, 2023.
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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.