Brazil

Energy Law and Climate Change

Executive summary

Brazil offers a compelling case study in how energy law can be leveraged to advance in climate action. The South American country has one of the cleanest energy matrices in the world, with renewables accounting for more than 80% of electricity generation, including hydropower, wind and solar. Brazil has also built a globally respected biofuels industry, anchored in ethanol and biodiesel, making it a great example of a country that has successfully integrated renewables across both power generation and transportation. These achievements position the country as a natural protagonist in the global energy transition.

The launch of the Proálcool Program in 1975 marked a turning point by promoting ethanol production from sugarcane and establishing Brazil as a pioneer in biofuels, primarily through government incentives, infrastructure investment, and mandates that integrated ethanol into the national fuel supply. In the electricity forefront, the country’s vast hydropower infrastructure was built through coordinated government planning and investment, making hydroelectricity the backbone of Brazil’s electricity supply. In the 2000s, programs like PROINFA (Incentive Program for Alternative Electricity Sources) expanded the energy mix by supporting wind, biomass, and small hydro projects through guaranteed purchase agreements and feed-in tariffs.

The connection between energy law and climate change is particularly evident in Brazil’s Nationally Determined Contribution (NDC) under the Paris Agreement. Although the country already has a high proportion of renewable electricity, the focus on legislation and policies involved in the energy sector will allow Brazil to decarbonize the so-called “hard to abate” sectors, such as transportation and industrial, as well as bring opportunities for the country to play a key role in the energy transition landscape worldwide.

In this context, energy law acts both as a safeguard for environmental integrity and enabler for transformative change. As Brazil continues to refine its regulatory frameworks and align them with climate imperatives, legal professionals have a critical role to play in helping shape policies, ensuring compliance, and advising on the implementation of projects. This chapter will further explore how the legislation seeks to drive the energy transition by reducing greenhouse gas emissions and unlocking new economic opportunities.

How climate change is impacting energy law

Climate change has elevated the role of energy law in Brazil’s broader climate strategy. As the country commits to achieving net-zero emissions by 2050 under its Nationally Determined Contribution (“NDC”), legal frameworks are being adapted to guide and accelerate the energy transition. Energy law now serves as a key instrument to operationalize climate goals – setting standards, enabling investment, and bringing more legal certainty to enable the projects to move forward. This includes not only traditional electricity generation but also emerging sectors such as offshore wind, renewable hydrogen, carbon capture and low-carbon fuels, in which a clear legal and regulatory framework is of outmost importance, especially in view of the pressing high costs involved in those projects.

Recent legal and policy developments reflect this shift. At a public policy level, the National Energy Transition Policy (PNTE)[1] has created a long term plan to enable the achievement of the sustainability goals for the energy sector, focusing on the following strategic pillars, all of which connect with recent developments in energy law:

• Renewable Energy Expansion: increasing the share of renewable energy sources, such as solar, wind, biomass, and hydropower, in Brazil’s energy matrix.
• Energy Efficiency: promoting the efficient use of energy across all sectors of the economy, reducing waste and energy intensity.
• Low-Carbon Fuels: encouraging the production and use of low-carbon fuels, such as biofuels, renewable hydrogen, and other cleaner alternatives.
• Technological Innovation: stimulating research, development, and innovation in clean energy technologies, such as energy storage, smart grids, and carbon capture.
• Just and Inclusive Transition: ensuring that the energy transition is socially just, creating job opportunities, professional training, and social development for affected communities.[2]

Similarly, the Energy Transition Acceleration Program (PATEN)[3] was created to coordinate public and private efforts toward decarbonization in the energy sector, with the main goal of promoting the financing of sustainable development projects, especially those related to infrastructure, technological research, and the development of technological innovation.

Energy Law can play a crucial role in advancing a sustainable and equitable transition to a low-carbon economy in Brazil, aligning legal frameworks with climate goals and fostering the deployment of clean energy technologies, provided that recently enacted laws are properly regulated.

How energy law can help to address climate change

As seen above, Energy Law is central to Brazil’s strategy for achieving net zero emissions. Below are main examples of key recent legal developments that connect with the energy transition:

Low carbon fuels

Enacted on October 8, 2024, Law No. 14,993/2024[4], derived from Fuel of the Future program establishes a comprehensive framework to accelerate Brazil’s transition to low-carbon fuels. It integrates multiple national programs, including those for green diesel, biomethane, and sustainable aviation fuel (SAF), and sets enforceable targets to decarbonize the transport sector. Among its key mandates, the law requires airlines to use at least 1% SAF by 2027 in domestic flights, scaling up to 10% by 2037.

The law also promotes the expansion of biomethane, a renewable fuel derived from organic waste and biogas, by creating incentives for its production and integration into the national energy matrix. According to the law, the National Council for Energy Policy (CNPE) will establish an annual target for reduction of emissions in natural gas consumption through acquisition of biomethane, which will start at 1% and will not exceed 10% of emissions reductions.

Carbon Capture and Storage

Law No. 14,993/2024 also provides for Brazil’s first legal framework for carbon capture and storage (CCS), regulating the capture, transport, and geological storage of CO₂, and enabling certification for carbon credits. The Law provides that the National, Oil, Natural Gas and Biofuels Agency (“ANP”) will be responsible for regulating carbon capture and storage activities and the sector awaits for the ANP regulation to that effect.

Low-carbon hydrogen

In August 2024, Brazil enacted Law No. 14.948/2024[5], establishing the country’s first comprehensive legal framework for low-carbon hydrogen and creating the National Policy for Low-Carbon Hydrogen. The law adopts a technology-neutral approach, defining low-carbon hydrogen as hydrogen produced from various sources with greenhouse gas emissions assessed through life-cycle analysis, and sets an initial threshold of no more than 7 kgCO₂e per kilogram of hydrogen. To ensure transparency and international alignment, the law also created the Brazilian Hydrogen Certification System (SBCH2), which will verify emissions and issue compliance seals based on life-cycle assessments. Regulatory oversight of the hydrogen supply chain is assigned to the ANP. Additionally, the law introduced REHIDRO, a special tax incentive regime for hydrogen producers. Complementing these measures, Law No. 14,990/2024[6] provides tax credits for the sale and commercialization of low-carbon hydrogen and its derivatives, reinforcing Brazil’s commitment to industrial competitiveness and its strategic positioning in the global hydrogen economy.

Offshore wind

Enacted in January 2025, Law No. 15,097/2025[7] creates Brazil’s first regulatory framework for offshore wind energy. It defines the use of maritime areas under federal jurisdiction for renewable energy generation and sets environmental and social safeguards, including decommissioning requirements and community consultations. The law aims to unlock Brazil’s vast offshore wind potential, lower energy costs, and stimulate local industry. It also includes incentives for technological innovation and sustainable development.

Brazilian Greenhouse Gas Emissions Trading System (SBCE)

Law No. 15,042/2024, enacted in December 2024, established the Brazilian Greenhouse Gas Emissions Trading System (SBCE), under the cap-and-trade mechanism. As a regulated carbon market, the SBCE sets emission limits and requires covered entities to hold Brazilian Emission Quotas (CBEs), each equivalent to one ton of CO₂e. Entities that emit less than their quota can sell excess allowances, while those exceeding limits must purchase credits or face penalties.

Future trends 

Brazil has made important progress in establishing the legal foundations for its energy transition, passing landmark legislation to that effect in the past years. These frameworks signal a clear commitment to decarbonization and have created strategic pathways for clean energy development. However, the full implementation of these laws depends on the publication of detailed secondary regulations, such as, such as presidential decrees and sectoral regulation, which are still under development.

A key challenge in this next phase is the limited institutional capacity of Brazil’s regulatory agencies, particularly the ANP, which has been tasked with overseeing emerging sectors such as renewable hydrogen, carbon capture, and low-carbon fuels. In this context, one interesting solution to monitor closely are the regulatory sandboxes. By allowing controlled experimentation with innovative technologies and business models under temporary, flexible rules, sandboxes can accelerate learning, reduce regulatory risk, and help agencies like ANP adapt more efficiently to the demands of the energy transition. Their use could be instrumental in bridging the gap between legislative ambition and regulatory execution. The ANP has included regulatory sandboxes in its regulatory agenda for 2025-2026[8].

On the power sector, as outlined in the NDC, although Brazil already boasts a high share of renewable sources in its electricity mix, the country is set to continue expanding its power generation capacity through a variety of mechanisms, including energy auctions, the free energy market, and distributed generation initiatives. The NDC highlights the following key important elements for the power sector, in connection with the energy transition and the increase of the share of renewables in the matrix:

• Energy transmission: energy transmission represents a bottleneck to the energy transition because power generation often occurs far from major consumption centers, requiring robust and flexible grid infrastructure to deliver clean energy reliably, especially as demand surges from sectors like data centers or hydrogen projects, that require constant, high-capacity electricity.
• Energy storage: the intermittence of renewable energy will require the incorporation of new technological solutions to meet power and system flexibility needs, including stationary batteries and other energy storage technologies. While the government has announced a dedicated auction for battery-based energy storage, its implementation is still pending formal confirmation.

[1] Brazil. Ministry of Mines and Energy (Ministério das Minas e Energia – MME). National Energy Transition Policy (PNTE). Brasília: MME, 2024. Available at: https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/dte/cgate/pnte

[2] Brazil. Ministry of Minas and Energy (Ministério das Minas e Energia – MME). National Energy Transition Plan (Plante). Brasília: MME, 2025. Available at: https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/dte/cgate/plante

[3] Brazil. Federal Law No. 15,103/2025. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2025/lei/l15103.htm

[4] Brazil. Federal Law No. 14,993/2024. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/lei/l14993.htm

[5] Brazil. Federal Law No. 14,948/2024. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/lei/l14948.htm

[6] Brazil. Federal Law No. 14,990/2024. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/lei/l14990.htm

[7] Brazil. Federal Law No. 15,097/2025. Available at: https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2025/lei/l15097.htm

[8] Brazil. National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional de Petróleo, Gás Natural e Biocombustíveis – ANP). Regulatory Agenda 2025-2026. Brasília: ANP, 2025. Available at: https://www.gov.br/anp/pt-br/acesso-a-informacao/acoes-e-programas/ar/agendaregulatoria20252026.pdf