Brazil’s senate has approved a bill that modifies several aspects of the environmental permitting process, potentially leading to significant changes in these procedures.

The various provisions of the bill – which, after being passed by the senate, must now be approved by the lower house and subsequently signed by the president – include the simplification of certain licensing procedures for specific projects and the establishment of fixed deadlines for environmental agencies to evaluate permit applications.

The implications of the bill, which may still undergo substantial revisions in the lower house, are being viewed with caution by experts.

“An overly lenient bill from a permitting perspective could backfire. It may lead to the depletion of natural resources, reduced land productivity and the need for increased investment,” Ricardo Zibas, regional lead partner for corporate sustainability and climate change in Latin America and the Caribbean at global sustainability consultancy Environmental Resources Management, told BNamericas.

“There is also the risk of environmental destruction due to a lack of oversight. However, it’s also true that an efficient permitting system can bring predictability to sectors such as infrastructure and mining. It’s better to allow legal and responsible exploitation than to let an area be irregularly occupied or exploited illegally,” he added.

“The bill needs to offer a balanced solution between excessive strictness and excessive leniency. Ideally, a middle ground should be found. Too much rigidity can stall viable projects, while too much leniency can cause irreversible damage and loss of control,” Zibas said.

The bill

One of the key changes introduced by the senate is the creation of a new type of permit with a simplified procedure for projects considered a priority by the government, known as a special environmental license (LAE).

This process, based on a single license, will follow a special, expedited procedure, with certain steps waived and review processes given priority. The license will apply to projects designated as priorities by the government based on recommendations from a government council.

The maximum review period for issuing the license will be one year. Currently, environmental licensing processes lack a fixed deadline, with some procedures taking years to complete.

“The creation of this special license could enable the advance of authorization for oil exploration in the Amazon, such as the request made by Petrobras to explore for oil in the Equatorial Margin of the Amazon river,” the senate said in a statement.

The Foz do Amazonas basin – considered the most environmentally sensitive area of the Equatorial Margin – lies at the center of Brazil’s strategy to reduce oil supply risks in the coming decade.

The bill also includes the mining sector within its new regulatory framework. During earlier debates, there had been proposals to exclude mining from the updated law in favor of maintaining specific regulations for the sector. The mining industry has come under scrutiny in environmental permitting matters, particularly after the human and environmental disasters caused by the collapse of tailings dams in 2015 and 2019.

The senate also authorized an exemption from licensing requirements for maintenance and improvement works on highways. This provision is likely to facilitate progress on the paving of highway BR-319 between Porto Velho and Manaus – a project that crosses the Amazon rainforest and which has been stalled since 2001.

The initiative is highly controversial, as environmental groups warn that paving the currently unpaved section poses a significant risk of deforestation.

The bill also increases the penalty for constructing or renovating polluting works or services without an environmental license. Currently, the penalty ranges from one to six months in prison. Under the new bill, this would increase to six months to two years. The penalty may be doubled if the project or activity is subject to an environmental impact study.

Political friction

The bill’s evaluation process has created internal divisions within Luiz Inácio Lula da Silva’s administration, with some government members supporting the bill and others opposing it.

“One of the main complaints we hear from investors when presenting our concession and PPP projects is the lack of clarity regarding the timelines for environmental permitting assessments. This uncertainty discourages many investors, as no one is willing to commit resources without knowing the execution schedule for a project,” a representative from Brazil’s infrastructure sector told BNamericas on condition of anonymity.

On the other hand, the environment ministry, led by Marina Silva, has criticized the bill.

“Currently under review in the national congress, bill (PL) 2,159/2021 – which addresses environmental licensing – represents a significant dismantling of the existing regulatory framework and poses risks to the country’s environmental and social security,” the environment ministry said in a statement.

“Moreover, it directly challenges the federal constitution, which in article 225 guarantees Brazilian citizens the right to an ecologically balanced environment, including the requirement of a prior environmental impact study for any project or activity that may cause environmental damage.”

The bill is part of broader changes that may be underway in Brazil’s environmental governance. According to aides to President Lula consulted by BNamericas, he is considering a leadership change at Ibama, the federal environmental regulator responsible for evaluating permitting requests.

Lula is reportedly dissatisfied with the performance of Ibama president Rodrigo Agostinho, who took office in 2023 and is currently being considered for replacement.

Ibama’s leadership has come under strain within the administration, mainly due to alleged resistance from agency technicians in approving licenses for Petrobras to explore in the Foz do Amazonas region – an initiative Lula supports to maintain high levels of national oil production.

The debate surrounding the bill could also provoke international backlash, as Brazil is expected to attract the attention of global sustainability-focused investors while hosting the 30th United Nations Climate Change Conference (COP30), scheduled for November 10-21 in Belém, capital of northern state Pará.