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Proposal to Change Licensing Rules, Including for the Oil and Gas Sector, to Be Voted on Wednesday (21) Pitting Executive and Legislative Against Each Other, Raising Discussions on Development and Environmental Protection.
The Bill 2.159/2021, which establishes the General Environmental Licensing Law, is at the center of an intense debate. Senate committees may vote on the matter next Wednesday (21/5). The proposal divides opinions among factions of the government and Congress, with significant implications for various sectors, including oil and gas.
Scheduled Vote and Key Supports for the New General Licensing Law
Committees of the Federal Senate have on the agenda for next Wednesday (21/5) the vote on Bill 2.159/2021. According to the Eixos website, this project aims to create the General Environmental Licensing Law. The rapporteurship is shared by senators Confúcio Moura (MDB/RO) and Tereza Cristina (PP/MS). The proposal receives the support of the president of the house, Davi Alcolumbre (União-AP).
Sectors such as agribusiness, energy, and infrastructure advocate for the approval of the law. They see the proposal as a way to modernize and expedite processes, in various sectors including oil and gas exploration.
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Self-Licensing and Agility for Sectors Such as Oil and Gas
One of the main innovations is the License by Adhesion and Commitment (LAC). This modality allows for self-licensing. It is aimed at small or medium-sized entrepreneurs with low or medium pollution potential.
The text also proposes to exempt the Operation License (LO) for linear enterprises. This includes transmission lines, gas pipelines, and mineral pipelines. Thus, projects in the oil and gas sector, such as gas pipelines, could operate after the Installation License (LI).
Additionally, the bill seeks to unlink environmental licensing from land use certificates and water grants. It also sets deadlines for responses from agencies such as Funai and ICMBio. The opinions of these agencies would not be binding on the final outcome.
Risks and Setbacks Pointed Out by Experts and Government
Environmentalists express great concern. They warn of the increased risks in projects for data centers and green hydrogen. They also include gas thermal plants, small hydropower plants (PCHs), and the exploration of oil and gas, including unconventional oil. Critics argue that simplification may lead to socio-environmental setbacks.
The environmental wing of the federal government opposes the project. João Paulo Capobianco, executive secretary of the Ministry of the Environment, states that the bill violates principles of environmental law. He cites the non-regression principle, which has already been consolidated by the STF. Capobianco criticized self-licensing for medium-sized works. He also pointed out the end of accountability for indirect impacts and the reduction of social participation. For him, the LAC suggests that the entrepreneur would define their own impact, which could lead to a “license by W.O.”.
The Brazilian Association of Public Prosecutors for the Environment (Abrampa) considers the text a “legal, institutional, and environmental setback.” Abrampa criticizes the exemption from licensing for activities with high pollution potential. It also disapproves of the exclusion of requirements for projects in indigenous, quilombola, and conservation unit territories. Prosecutor Tarcila Gomes, vice president of Abrampa, states that the green economy would be harmed and international agreements violated.
Unification of Standards and Stimulus to Economic Development Aiming at the Oil and Gas Sector
On the other hand, supporters of the proposal argue for its necessity. Senator Confúcio Moura acknowledges the controversy. However, he states that Brazil needs a clearer and more uniform framework for licensing. He highlights the “myriad of norms” that exist and the lack of standardization among states.
Senator Tereza Cristina maintains that the proposal aims to unlock economic development. It also seeks to correct social inequalities. She cited the difficulty of providing electricity to remote areas due to licensing impediments. “We cannot continue to prevent some Brazilians from having electricity in 2025,” she declared. For Cristina, the project is a “mediation instrument.”
Julia Sagaz, socio-environmental director of Abiape and coordinator of FMASE, states that the project corrects a mismatch between state and federal legislation. For her, “it is not a law that comes to flexibilize or a license to pollute.” Sagaz argues that the text brings legal security, which is vital to unlocking investments in sectors such as oil and gas, and does not eliminate the EIA/RIMA. She points out that the law allows for the use of secondary data and expedites terms of reference. Regarding the limitation of conditions, Sagaz emphasized that they should have a direct relation to the enterprise.
Impacts and Expectations with the New Legislation, Including in the Oil and Gas Sector
For the oil and gas sector, the changes could mean greater agility. The exemption from the Operation License for gas pipelines is one example. The exploration of oil and gas is also cited as an area of impact.
The debate on environmental conditions is central. The proposal limits conditions to the prevention, mitigation, and compensation of direct impacts. The productive sector hopes that this will bring more speed. Environmentalists, however, fear that the measure will weaken environmental protection. The discussion about the balance between development and sustainability, especially in activities like oil and gas, remains heated.
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