Brazil launches Metano Zero and a Federal Strategy for biogas and biomethane

The Brazilian government launched in March 2022 a package of incentives for biogas and biomethane. Decree 11.003 of 21 March 2022 established the Federal Strategy to Encourage the Sustainable Use of Biogas and Biomethane, and Portaria MMA 71/2022 set up the National Methane Reduction Programme, popularly known as Metano Zero. The programme was justified by Brazil's commitments from the COP26 climate conference.

What the strategy provides

The decree provides for actions facilitating the production and use of biogas and biomethane, including incentives for producers using municipal and agricultural waste and the promotion of a market in "methane credits". According to legal commentary (Mayer Brown, Mattos Filho), alongside the decree Portaria MME No. 627 was issued, which brought biomethane investments into the REIDI regime (Regime Especial de Incentivos para o Desenvolvimento da Infraestrutura), which suspends PIS/Pasep and Cofins contributions on the purchase of machinery, construction materials and services. Among its guidelines the decree also lists, among other things, supporting the carbon credit market, especially "methane credits", and promoting biodigesters, biogas cleaning systems and biomethane production.

Metano Zero

The Metano Zero programme is to be coordinated by the Secretaria de Qualidade Ambiental of the environment ministry in cooperation with the secretariat for climate and international affairs. Its aim is to reduce methane emissions – a gas with high global warming potential – from agriculture, waste and other sectors, and to convert it into a renewable fuel.

Context

Brazil is a major producer of sugar cane, meat and soya, and agriculture and waste are important sources of methane. In 2021 the country joined the Global Methane Pledge announced at COP26, and the Metano Zero programme was one of the national responses.

Significance for the industry

For the biogas market it matters that the package combines energy and climate policy: support for biomethane production and market instruments based on methane emission reductions. The practical significance depends on later implementing regulations, ANP specifications and systems for recognising methane credits.

Implementation risks

What is key is how methane credits will be defined, who will verify them and on what market they will be sold. Without clear rules for counting reductions and avoiding double counting, the programme will remain a declaration.

What this means for Poland and Europe

The combination of incentives for biomethane with a market in methane credits shows that developing countries are looking for instruments linking climate, energy and waste. In the EU a similar role is played by the 2020 methane strategy and the RED II targets, though without direct trading in "methane credits".