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Lula government raises tax on solar panels from 9,6% to 25%; sector warns of rising costs and economic losses
Last Monday (11), the Executive Management Committee (Gecex), linked to Ministry of Development, Industry, Commerce and Services, has made a decision that promises to shake up the solar energy sector in Brazil. The import tax rate on photovoltaic modules has been increased from 9,6% to 25%. The increase in tax on solar panels has generated great debate.
For experts, this increase not only threatens the competitiveness of solar energy, but can also bring a series of negative consequences for the economy, the environment and Brazilian consumers.
Will tax increase on solar panels hinder the energy transition?
Solar energy is one of the pillars of the global energy transition. However, this decision, which coincided with COP 29 in Azerbaijan, sends a message to the world.
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A Brazilian Photovoltaic Solar Energy Association (Absolar) expressed concern about the measure. According to the entity, the tax increase could generate a series of impacts, including:
- Increase in the price of solar energy: With more expensive modules, the cost of photovoltaic systems is expected to rise, driving away consumers looking for alternatives to conventional energy.
- Fall in investments: Investors can redirect their resources to more attractive and predictable markets.
- Capital flight: Instability in public policies discourages large investors from remaining in the country.
- Increase in inflation: With higher energy costs, sectors dependent on solar energy will also feel the impact.
- Company closure: Small and medium-sized systems installation and maintenance companies cannot afford the increased costs.
- Loss of jobs: More than 750 jobs that could be created by 2026 are at risk.
Is the national industry prepared?
One of the government's justifications is the intention to strengthen the national solar panel industry. Currently, Brazilian companies are mere assemblers, using entirely imported inputs.
Furthermore, the country's production capacity is only 1 GW per year, while demand in 2023 was over 17 GW. This discrepancy shows that, even with the increase in the tax rate, the domestic market is not ready to meet the sector's needs.
Furthermore, most large photovoltaic generation projects require certified, high-quality equipment, standards that domestic industries do not yet meet. Without the possibility of importing these modules, many projects already contracted may be canceled.
Economic and environmental consequences
Absolar revealed alarming figures in its survey: at least 281 projects, totaling more than 25 GW of installed capacity and R$97 billion in investments by 2026, could become unfeasible. These projects would not only create jobs, but would also contribute to a significant reduction in CO2 emissions, estimated at 39,1 million tons.
For the association, this means that Brazil would give up environmental and social benefits in exchange for a policy that does not offer real guarantees of strengthening the national industry.
The impact on the labor chain
The labor chain in the solar photovoltaic sector in Brazil is one of the most dynamic, encompassing distribution, movement, installation and maintenance of systems. For every 30 jobs created, only two are related to equipment manufacturing.
In other words, the increase in the rate directly affects the most robust sectors, compromising job creation and economic growth.
The Government believes that the increase in the rate will contribute to strengthening the national solar panel market, boosting the growth of the local industry due to the increased demand for products manufactured in the country.
Decisions like these show the importance of well-founded public policies that take into account not only the short term, but also the long-term impacts on the country’s development. Brazil has immense potential to lead the energy transition, but it needs strategies that encourage, rather than hinder, this progress.
This way it is even difficult to defend the Lula government. I know that many fiscal adjustments depend on the assembly, but what was supposed to make life easier for Brazilians, the government has made everything more expensive every day.
A huge tax rate, just to maintain the luxurious lives of politicians???
This government is a disgrace, this type of increase only has to do with the government, they can't blame anyone as they usually do.
Make the L lol