Brazil Congress approves much-anticipated offshore wind framework, but with a sooty surprise

The lower house of Brazil’s Congress has approved an amended version of the legal framework for offshore wind power, with a surprising addendum that guarantees a place for coal in the baseload of the country’s electricity grid.

Brazil’s promise to put a regulatory framework in place by the end of this year is being keenly watched by an international offshore wind sector attracted to the superb conditions for wind power found in several coastal regions, along with a deep and relatively open domestic electricity market.

Offshore wind experts have questioned some aspects of the proposed Brazilian contracting system for the tendering, development and commercialisation of wind power, with signature bonuses and royalty-like tariffs said to be inspired by the country’s oil and gas concessions.

However, interest is so strong that scores of permitting applications have already been submitted to the country’s environmental regulator.

According to industry specialist Aegir Insights, Brazil has more than 80 projects in the planning and permitting stage. On some accounts, they add up to as much as 140GW, although many of these are on overlapping areas.

The bill proposing the regulatory framework was approved by Brazil's Chamber of Deputies under a new fast-track procedure on Wednesday night, but only after the lower house's chief negotiator for the legislation, Ze Vitor, had included an addendum extending until 2050 contracts that guarantee the coal industry a role in supplying power to the country's grid, including part of the baseload.

Coal questioned

The move drew criticism, not least because of the additional costs to the consumer in a country that is rich in oil and gas, but has a relatively small coal sector.

"We have approved a wind project that has incentives for coal-fired power generation, and on the eve of COP28," Luiz Eduardo Barata, head of Brazilian grid operator ONS told Brazil's Globo news organisation.

The industry federation of Rio de Janeiro (Firjan) released a statement criticising another legislative addendum that would provide price incentives for the production of gas-fired power from thermoelectric plants with poor access to natural gas supplies.

Firjan lauded the use of a fast-track procedure for approving the regulatory framework for offshore wind as it represents a "significant step for Brazil's progress towards a fair energy transition".

"However, we must repudiate the inclusion of devices that will cause a distortion in the Brazilian economy, harming the competitiveness of national industry," Firjan stated.

The proposed regulatory framework will now go to the Senate, where it may undergo amendments.

Another bill, regulating carbon capture and storage, was approved at committee state in the lower house.

President Luiz Inacio Lula will attend the COP28 event in Dubai just as Brazil takes over the presidency of the G20 and he is expected to start laying out plans for hosting COP30 in 2025.

In an unrelated move, Brazilian Energy Minister Alexandre Silveira said on Thursday that it has decided to join OPEC, the powerful grouping of many oil exporting nations.