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Billion-dollar project in Vale do Paraíba reignites the debate on firm energy, environmental licensing, and limits for new natural gas plants in Brazil, following Ibama’s decision to halt a large-scale thermoelectric plant even before construction began.
The Brazilian Institute of Environment and Renewable Natural Resources denied, on January 21, 2026, the preliminary license for the São Paulo Thermoelectric Plant, planned for Caçapava, in São Paulo’s Vale do Paraíba.
With an estimated investment of around R$ 5 billion and an installed capacity of 1.74 GW, the project’s licensing process was terminated after the agency pointed out insufficiencies in the environmental studies presented by the responsible company.
The decision affected one of the largest thermal projects planned for Brazil and halted, still in the initial phase, the attempt to install a natural gas plant in a strategic region between São Paulo and Rio de Janeiro.
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Given its announced size, the UTE São Paulo was considered one of the largest thermoelectric plants in the country and could surpass units already in operation in Latin America.
In practice, the preliminary license functions as the stage that assesses the environmental viability of a project before construction.
This authorization does not permit construction but sets conditions for the project to advance to the next licensing phases, such as installation and operation.
Without this initial approval, the plant could not proceed within the federal process analyzed by Ibama.
The veto’s central point was the lack of necessary additions for the environmental assessment.
According to Agência Brasil, Ibama reported that the company did not present the complete Environmental Impact Study and Environmental Impact Report, even after two requests for additions made by the agency.
Besides the technical discussion, the denial ended a process marked by local mobilization, legal challenges, and pressure from environmental entities.
In Caçapava, civil organizations, municipal councils, and regional groups criticized the project for potential impacts on emissions, water consumption, air quality, and public health.
Ibama points out flaws in the environmental studies of UTE São Paulo
Powered by natural gas, the UTE São Paulo was intended to generate energy for the National Interconnected System, responsible for supplying most of the country.
Thermal plants of this type are usually activated to provide security to the system during periods of lower hydroelectric, solar, or wind generation.
To move forward, however, a project of this magnitude needs to demonstrate, with sufficient technical documentation, what its impacts would be and what measures would be adopted to reduce them.
In the case of the Caçapava plant, Ibama concluded that the information presented did not allow for declaring the environmental feasibility of the project.
The decision was based on the rules of federal environmental licensing and the need for additional studies required during the analysis.
Provided for in Conama Resolution No. 237/1997, the assessment establishes stages, deadlines, and procedures for projects capable of causing significant environmental impacts.
In denying the license, Ibama did not only consider the size of the project or the volume of investment announced.
For the agency, the absence of complete technical information prevented the continuation of the process, especially in a project with the potential to affect municipalities in the Vale do Paraíba.
Judicial dispute was already pressuring the licensing of the thermal power plant
Before the final denial, the licensing of the thermal power plant had already been suspended by the Federal Court.
On January 31, 2024, the 3rd Federal Court of São José dos Campos ordered the suspension of the administrative procedure and prevented the holding of a public hearing on the project.
The action was proposed by the Federal Public Ministry and pointed out problems in the process, including the absence of a regular certificate of land use and occupation.
It also cited the need to consider municipalities that could be impacted by the plant, such as Monteiro Lobato, Pindamonhangaba, Taubaté, Tremembé, and Santo Antônio do Pinhal.
With the judicial decision, the public hearing scheduled for that moment was canceled.
In the MPF’s assessment, the discussion about the plant could not be restricted to Caçapava if the environmental and social effects could reach other localities in the region.
The controversy also went through municipal legislation before reaching the conclusion in federal licensing.
In October 2022, the Caçapava City Council changed zoning rules and prohibited the installation of thermal power plants in the municipality.
Subsequently, a preliminary decision in a direct action of unconstitutionality again allowed the possibility of such projects.
With this, the project remained under discussion until Ibama’s final analysis.
Vale do Paraíba concentrates reaction to the natural gas project
The location of the plant increased the repercussion of the case and helped turn the licensing into a regional dispute.
Caçapava is located in the Vale do Paraíba, an area with a strong industrial presence, urban density, and proximity to the Serra da Mantiqueira, as well as a direct connection with important logistical corridors between São Paulo and Rio de Janeiro.
In this context, the discussion went beyond the relationship between the company and the environmental agency.
Local and regional organizations claimed that a thermal project of this size could affect the quality of life of residents in different municipalities, especially due to pollutant emissions, pressure on water resources, and accumulated effects in an already urbanized region.
According to Agência Brasil, entities such as the Brazilian Institute for Environmental Protection, the Municipal Environmental Council of Caçapava, the National Union of Federal Public Servants in the Aerospace Science and Technology Sector, and the Permanent Forum in Defense of Life positioned themselves against the project.
The Environmentalist Front of the Vale do Paraíba Paulista also celebrated Ibama’s decision.
Contacted by Agência Brasil, Natural Energia, identified as responsible for the project, had not commented by the time the report was published.
Thus, the company’s public position remained limited to the documents presented in the licensing process and the administrative stages already analyzed by the environmental agency.
Firm energy enters the center of the energy transition
The case exposes a growing tension in the Brazilian electricity sector.
On one hand, natural gas thermal power plants are defended as a source of firm energy, capable of sustaining the system when hydroelectric, wind, and solar produce below expectations.
On the other hand, fossil projects face resistance due to emissions and local impacts.
With the expansion of renewable sources, the country has begun to discuss more intensely how to ensure supply during periods of low variable generation.
Even so, the construction of new thermal plants requires rigorous environmental assessment, especially when the project involves large power, supply infrastructure, and operation in a densely populated area.
In the case of UTE São Paulo, Ibama did not authorize the advancement because it understood that the available studies did not sufficiently meet the technical requirements.
The decision turned a regional enterprise into a national reference on the limits of licensing large energy projects.
It also becomes evident, from the veto, that billion-dollar investment and high capacity are not enough to guarantee environmental approval.
Without complete studies, adequate consultation, and demonstration of viability, strategic projects may be halted before even starting construction.
UTE São Paulo encompassed some of the most sensitive points of the Brazilian energy transition, such as supply security, natural gas, licensing, litigation, local resistance, and environmental goals.
With the filing of the process, the project ceases to advance, while the discussion remains open on how the country should balance firm generation, environmental protection, and new energy investments.
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