15/09/25
Written by: Sonia Marques Döbler e Thaís Silveira Araújo
In November 2025, Brazil will host the 30th United Nations Climate Change Conference of the Parties (COP30) in Belém do Pará, a capital city located in the heart of the Amazon rainforest, reaffirming the country´s leadership role in international negotiations on climate change and global sustainability.
The event represents a strategic opportunity for Brazil to showcase its progress in fulfilling the commitments undertaken under Paris Agreement at COP21, namely reducing greenhouse gas (GHG) emissions and consolidating a sustainable development model that is based on renewable energy, adapted to climate change, and committed to the preservation of forests and biodiversity.
This agenda fundamentally relies on public policies that are designed and implemented to promote economic development and safeguard the competitiveness of the Brazilian economy and of companies operating in the country, while in harmony with environmental protection.
In this context, tax policy plays an important role in accelerating investments and creating a more favorable atmosphere for businesses committed to sustainability, through the granting of tax relief, tax credits, and special regimes. From this perspective, this article examines guidelines currently in place to support the energy transition and sustainable development.
Compliance with the Paris Agreement and its compromise to reduce greenhouse gas (GHG) emissions require the maintenance and expansion of a renewable-based energy matrix. In this regard, Brazil holds a prominent position as one of the world’s largest producers of biofuels (ethanol and biodiesel) and clean energy (wind and solar, among others).
A key milestone in this process was the enactment of Law No. 14,300/2022, which created the Electric Energy Compensation System (SCEE). The law fostered decentralized generation and self-generation of energy, expanding private sector participation in the renewable energy matrix through solar and other clean energy projects.
In recent years, new statutes have also reinforced Brazil’s engagement to energy transition matters. Law No. 14,902/2024 created the Green Mobility and Innovation Program (MOVER), which combines financial and tax incentives to advance energy efficiency technologies in the automotive sector. Complementarily, Law No. 14,993/2024, known as the Future Fuel Law, sought to align the transportation matrix with decarbonization targets, integrating the guidelines established by the Brazilian authorities under the National Energy Transition Plan.
Also noteworthy is Law No. 14,948/2024, which established the legal directives for low-carbon hydrogen and for Special Regime for Low-Carbon Hydrogen Production (Rehidro). More recently, in 2025, Law No. 15,097/2025 was enacted to regulate offshore energy potential, particularly offshore wind, and Law No. 15,103/2025 launched the Energy Transition Acceleration Program (PATEN), aimed at financing private-sector sustainable projects.
However, public policies must also stimulate the shift from fossil fuels to renewables sources. For this reason, Law No. 15,042/2024 established the Brazilian Greenhouse Gas Emissions Trading System (SBCE), the country’s first regulatory framework for the carbon market. Inspired by the cap-and-trade model of the European Union Emissions Trading System (EU ETS), the SBCE sets emission limits for specific sectors and allows companies to trade carbon credits, named as Brazilian Emission Allowances (CBEs). This mechanism turns GHG reductions into an economic asset, thereby promoting cleaner and more efficient practices.
Although Brazil has taken important steps toward building legal context for the energy transition, its effectiveness will ultimately depend on additional factors, such as adequate infrastructure and alignment with tax policy. The next section will address fiscal instruments that aim to support this transition.
Energy transition projects may benefit from the Special Incentive Regime for Infrastructure Development (REIDI), created by Law No. 11,488/2007. This tax treatment suspends the levy of PIS and COFINS contributions on imports and acquisitions of goods, services, and materials used in infrastructure works, while preserving the related tax credits. Article 28 of Law No. 14,300/2022 extended this regime to decentralized and self-generation energy projects, thereby reducing the tax burden on renewable energy investments, particularly for small producers.
For the automotive sector, the Green Mobility and Innovation Program (MOVER) of Law No. 14,902/2024 combines financial credits with tax incentives for research and development expenses to stimulate sustainable technological advancements. Taxpayers accredited under the regime may obtain financial relief, partially calculated on taxes paid in their operations, and deduct technology-related expenses in the assessment of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL). The program also grants a special import regime for auto parts, reducing the Import Duty (II) rate, provided that taxpayers allocate 2% of the customs value of their imports to research, development and innovation projects.
Similar tax relief and innovation incentives were given under the Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro) of Law No. 14,948/2024, as well as in other energy transition guidelines. In addition to these instruments, the Energy Transition Acceleration Program (PATEN) of Law No. 15,103/2025 introduced a distinctive feature: companies with sustainable development project approved by the Federal Government may submit an individual tax settlement proposal to negotiate and obtain reductions in their federal tax liabilities.
Beyond these special regimes, there are measures directly aimed at reducing the tax burden on renewable energy and sustainable products. Article 8 of Law No. 13,169/2015 reduced to zero the rates of PIS and COFINS contributions on the supply and distribution of electricity resulting from credit compensation under the Electric Energy Compensation System (SCEE), particularly benefiting shared and self-generation projects. In the automotive sector, sustainable vehicles likewise benefit from reduced Tax on Manufactured Products (IPI) rates, reinforcing the use of fiscal policy as a tool to promote clean technologies.
After the enactment of the Brazilian Tax Reform, which will introduce new consumption taxes in 2026 (IBS – the Goods and Services Tax and CBS- Contribution on Goods and Services CBS), an express provision was included to maintain a preferential tax regime for biofuels, with reduced rates to ensure that these products are taxed at a lower level than fossil fuels. At the same time, the reform also enacted the Selective Tax (IS), often referred to as a “sin tax,” designed to discourage, among other things, the consumption of goods and services harmful to the environment, including fossil-fuel vehicles, by imposing an additional tax burden.
These provisions reinforce social and political premises underlying the approval of the Tax Reform, which elevated environmental protection to the status of a constitutional principle of the Brazilian tax system and consolidated tax policy as a tool to promote sustainability.
However, the new Tax Reform did not address the taxation of carbon credits, which has been regulated under Law No. 15,042/2024. This highlights the need for further updates, as the Carbon Market Legal Framework established rules for such transactions, including income taxation and exemption from PIS and COFINS contributions. These exemptions must still be replicated for the new consumption taxes (IBS and CBS) in order to prevent competitiveness losses in the sector.
Thus, while tax policy plays a decisive role in fostering energy transition, fiscal incentives alone are not sufficient. Long-term investments also require regulatory stability and legal certainty, as well as adequate infrastructure and coordinated action from public policies, regulatory agencies, and supervisory authorities.
Article published by the Câmara Brasil-Alemanha de São Paulo | AHK Brasil, in “Recht & Steuern in Brasilien 2025 – 3rd edition.”
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