Green agenda in Congress faces Lira and Pacheco feud – 04/09/2024 – Market

Projects on the green agenda face difficulties in advancing in the Federal Senate, after passing —also with setbacks— through the Chamber of Deputies.

Considered a priority by the Lula (PT) government, they are being threatened by a dispute between the presidents of the Senate and the Chamber, Rodrigo Pacheco (PSD-MG) and Arthur Lira (PP-AL), in addition to tortoises, the name given to the strategy of include themes in a bill that are parallel to the root of the proposal.

The delay in approving projects, such as the regulation of the carbon market and offshore wind farms, now also comes up against a lack of time for legislative work this year, as municipal elections reduce the time dedicated by parliamentarians to analyzing proposals in the second half of the year. . In other words, if the proposals are not approved in the first half of the year, there may not be enough time to debate the issues during the remainder.

Of the four main projects already considered by deputies —carbon credit, offshore wind farms, Paten (Energy Transition Acceleration Program) and biofuels—, the first three have not yet had a defined rapporteur.

Green hydrogen, a topic seen by many as a potential revolution in the Brazilian energy matrix, is being processed simultaneously with two projects, in both houses, and is hampered by the lack of consensus on their wording.

The carbon credit project is involved in a legal dispute between the president of the Senate, Rodrigo Pacheco (PSD-MG), and the president of the Chamber, Arthur Lira (PP-AL). This Monday (8), Pacheco said that the topic will be a priority for the Senate in April.

The issue of wind farms is the subject of dispute due to the various tortoises that were inserted into its text by deputies — and which could generate R$39 billion in incentives for pollutants and increase Brazilians’ electricity bills by 11%.

Both began to be processed in the Senate and were approved by the Chamber at the end of last year. When they returned to the initial House, by tradition, the original rapporteurs would be appointed to take care of them, in an act that should be merely bureaucratic. Even so, months after reaching the Senate, the two proposals remain frozen on Pacheco’s desk, without any movement.

In the case of the carbon market, considered by many to be the most important in environmental and energy transition terms, the main dispute is over its processing procedure. It was approved by the Senate in the first half of last year, under the report of Leila Barros (PDT-DF), with one exception that freed agribusiness from commitments to reduce greenhouse gas emissions.

Deputies maintained the exception, but changed the text. Therefore, he returned to the senators who, in theory, would have the power to ratify or undo such changes.

However, Lira maneuvered to give the Chamber the final say on the wording. He archived the proposal that had been approved by the senators and incorporated its text into an older proposal authored by a deputy, transforming his House into the initiator of the process.

Thus, he argues that the text approved by deputies at the end of 2023 and now in the Senate, if changed, has to return to the Chamber. Pacheco disagrees.

This dispute is part of a larger disagreement between the two, which involves the procedure for processing Provisional Measures and also a regulatory change made by Lira in 2022 and contested by the senator.

Pacheco is expected to meet with consultants this week to analyze the changes that were made by the Chamber to the project. According to allies, if he understands that the changes were relevant or not very relevant, the fact that the Chamber has the final say becomes less problematic and the disagreement over the processing would be alleviated, in the case of this project specifically.

On the contrary, if the assessment is that the deputies changed the text too much, or if the president disagrees with the changes, having the power of approval becomes a decisive factor again and the impasse gains weight.

Behind the scenes, there are those who consider the possibility of the matter ending up in court — there are already lawsuits due to disputes between the two presidents.

There is fear that, if the text returns to the Chamber once again, there will not be time for it to be approved in Congress this year.

Furthermore, parliamentarians remember that next year, the Congress’s thematic committees will change chairs, which could further delay the processing of the text, depending on who is chosen to head the Environment and Economy groups.

There is also no consensus between some points of the project, such as the creation of the jurisdictional market — in which states can develop carbon credits in their territories.

The inclusion of agribusiness in the regulated market, an agenda mainly for environmentalists, is already considered by many to be a losing battle. Pacheco could, in fact, choose Senator Tereza Cristina (PP-MS), a strong ally of the sector, to report on the topic.

“Today we understand that it is practically a point of no return in the sense that it is unlikely that, after such an explicit exclusion, at the beginning of the project, it will be possible to reverse”, says Viviane Romeiro, director of climate, energy and sustainable finance of the Brazilian Business Council for Sustainable Development.

She recalls that the project foresees several months of adaptation time until the market is implemented. Therefore, the delay in approving the text could mean that the sector’s implementation will only happen at the end of the decade.

The offshore wind project should, by tradition, be assigned to Carlos Portinho (PL-RJ), the original rapporteur in the first passage of the text in the Senate. However, the numerous tortoises included in the proposal made its processing more delicate and subject to different interests.

Devices were included that disfigure the sustainable nature of the proposal, for example billion-dollar incentives for the coal and gas sectors, both of which pollute.

Furthermore, the addition of these subsidies has the potential effect of making the end consumer’s electricity bill more expensive. Once again, the project did not move forward.

Paten only arrived at the Senate in March of this year, but until now, he has not had a defined rapporteur. Parliamentarians, however, still do not see this with concern. They mention that, since the approval of the project, Congress went through two empty weeks, which explains the lack of reporting.

The only proposal that already has an official guardian is that of biofuels, the vice-president of the Senate, Veneziano Vital do Rego (MDB-PB) — which does not mean that there was no dispute.

During the proceedings in the Chamber, there was a clash between the agribusiness and oil sectors over the merits of the text. The dispute extended to the rapporteurship in the Senate — with victory for the second group, which defended Veneziano, over the first, which wanted Vanderlan Cardoso (PSD-GO) to lead the discussion.

It is the only one of the proposals that has already seen concrete progress, and the first public hearings to debate the topic should start taking place next week.

Secretary of Green Economy and Decarbonization of the Ministry of Industry and Commerce, Rodrigo Rollemberg, has been working in support of the proposals. “Our expectation is that the entire green agenda will be approved by June,” he said.

Deputy leader of the government in the Senate, Jorge Kajuru (PSB-TO), states that Rodrigo Pacheco “failed to resolve” the dispute over the processing of carbon credits. “[As propostas ainda] were not approved due to a complex process of legislative processing”, he states,

“The government is working with parliamentarians to ensure that they move forward this semester,” he added.