Brazil’s Bolsonaro enacts law benefiting coal industry in Santa Catarina

RIO DE JANEIRO, BRAZIL – The bill had been presented early in Bolsonaro’s term, but was only passed by the Senate in mid-December last year with the support of the Santa Catarina caucus.

Despite the renewal of the authorization for this thermoelectric plant (coal-fired), the new law establishes the PTJ (Fair Transition Policy), focused on clean energy and the reduction of pollutants. It also establishes an energy transition program (TEJ) to eliminate carbon emissions by 2050.

The government’s support base in Congress agreed to give Santa Catarina more time to prepare for the end of coal-fired power generation in 2040. Mines are to be closed.

CTJL belonged to the Engie group and was sold in August last year to FramCapital investment fund for R$325 (US$57) million.

The new law also guarantees a government pledge for a reserve power purchase contract for the plant, defining a fixed revenue sufficient to cover generation costs.

It also determines that at least 80% of the input (coal) to power the plant will need to be purchased in Santa Catarina, a state where Bolsonaro has one of his largest support bases and where coal is one of its main employers.

With the enactment, Bolsonaro also guaranteed a compensation that had been advocated by the Santa Catarina state legislature due to the end of the subsidy to coal-fired power generators.

The government had agreed that in 2027, the CDE (Energy Development Account) will no longer subsidize energy generated by coal-fired plants. This account is responsible for the moderation of tariffs.

In addition to renewing support for the coal industry, the new law also establishes a subsidy program for customers of smaller distributors – below 350 GWh (Gigawatt-hours) per year.

This subsidy is designed to prevent the tariffs of these smaller companies from being higher than those of larger distributors in neighboring cities.

The law also grants advantages to distributors that acquire others with a market of less than 700 GWh per year. If such a company supplies energy to the purchasing target company, it will be entitled to 25% of the subsidy now granted by the new law for a period of 10 years.