Brazil implements new criteria for Climate Fund and approves US$ 67M for renewable energy

Members of the Council for Economic and Sustainable Social Development have called for stricter cost-benefit criteria for investments made by the Climate Fund. In a letter addressed to the Planalto Palace and BNDES, council members expressed concerns regarding the lack of formal metrics to measure results per ton of carbon avoided, warning that this absence makes the fund vulnerable to deviations from its intended purpose.

The council specifically criticized investments in corn ethanol industries in Mato Grosso, noting high water consumption in water-stressed biomes and potential deforestation risks in the Cerrado. They also recommended restrictions on carbon capture technologies due to high costs and suggested that financing for strategic minerals should be limited to processing and transformation rather than mining.

In a related development for Brazil's energy transition, the Senate's Economic Affairs Commission approved a US$ 67 million external credit operation from the Inter-American Development Bank (IDB) and the Climate Investment Funds (CIF). Managed by Banco do Nordeste (BNB), these funds aim to expand renewable energy sources within the National Interconnected System to reduce carbon emissions. The financing features a 96-month grace period and a 20-year repayment term, offering more favorable interest rates than domestic borrowing options.