As a result of the conversion process of Provisional Measure 1,151/22, Federal Law 14,590/23 was enacted on May 24, amending provisions of three important rules related to carbon credit projects in forest areas – mainly public forests subject to forest concessions through bidding – and other environmental services in conservation units. The three amended rules are:
- Federal Law 11.284/06, which provides for the management of public forests for sustainable production;
- Federal Law 11.516/07, which provides for the creation of Chico Mendes Institute for Conservation of the Biodiversity (ICMBio); and
- Federal Law 12.114/09, which creates the National Fund on Climate Change (FNMC).
Changes in the Public Forest Management Law (Federal Law 11.284/06)
The first relevant change implemented by Federal Law 14,590/23 in the Public Forest Management Law refers to the definition of forest concession. In addition to the onerous delegation of the right to practice sustainable forest management activities for the purpose of exploiting products and services in a management unit, forest concession now encompasses the delegation of forest restoration and exploitation of products and services in management units that are specified in the object of the concession contract, through bidding (Art. 3, item VII, Law 11.284/06).
As highlighted by § 1 included in article 3 of the aforementioned law, the concession modalities set forth in the Public Forest Management Law should not be confused with concessions of services, areas or facilities of conservation units.
The definition of management unit was also extended. In addition to being understood as the "perimeter defined from technical, sociocultural, economic and environmental criteria, located in public forests, object of a Sustainable Forest Management Plan, and may contain degraded areas", the management unit now encompasses areas "used for forest restoration activities or exploitation of other services and products".
The degraded areas considered for the definition of the perimeter, which previously should be destined for recovery by means of forest plantations, are also no longer conditioned to this objective (Art. 3, item VIII, Federal Law 11.284/06).
These changes extend the previous definitions and allow more areas to be considered in forestry projects.
Prohibitions on granting rights under the forest concession were also edited by Federal Law 14,590/23. The following items were excluded:
- access to genetic heritage for purposes of research and development, bioprospecting or collection-building;
- exploitation of fishery resources or wildlife; and
- commercialization of credits arising from avoided carbon emissions in natural forests.
With the change, granting of such rights became authorized.
Federal Law 14,590/23 also stated the possibility for the concession agreement to provide for the transfer of ownership of carbon credits from the granting authority to the concessionaire during the concession period.
It also allowed the right to market certificates representing carbon credits and associated environmental services, except for areas occupied or used by local communities (Art. 16, § 2, Law 11.284/06). Under previous provision, the right to trade carbon credits could only be included in the object of the concession in case of reforestation of degraded areas or converted to alternative land use.
Inclusion of the exploitation of non-timber forest products and services in the object of the concession agreement is also authorized, provided that the activity is carried out in the respective forest management units (Art. 16, § 4, Law 11,284/06). The exploitation of non-timber forest products and services should be regulated by specific rules.
The rules related to environmental licensing for sustainable use of management units have also been edited.
With provision given by Federal Law 14,590/23, exploitation of native forests and successor formations in public domain now depends on licensing from the competent environmental authority of the National Environmental System (Sisnama), upon prior approval of the Sustainable Forest Management Plan, according to Federal Law 12,651/12 (Forest Code). Concessions for conservation and restoration are exempt from environmental licensing.
Another innovation of Federal Law 14,590/23 was to allow the concessionaire to promote the operational unification of sustainable forest management activities in forest management units, continuous or not, when granted to the same concessionaire, provided that the areas are located in the same conservation unit or concession lot.
Operational unification must be carried out by means of an amendment to the concession agreement and will allow the draft of a single Sustainable Forest Management Plan for all management units, besides unifying forestry operations (Art. 27, §§ 5 and 6, Federal Law 11.284/06).
Changes in the law that provides for the creation of ICMBio (Federal Law 11.516/07)
In accordance with the changes implemented in the Public Forest Management Law, Federal Law 14,590/23 also amended Federal Law 11,516/07, which provides for the creation of ICMBio.
The changes implemented by Federal Law 14,590/23 made it possible for the management authority of the conservation unit to grant, alone or jointly, the:
- transfer of ownership of carbon credits from the granting authority to the concessionaire during the concession period, as well as the right to market certificates representing carbon credits and associated environmental services; and
- exploitation of non-timber forest products and services, provided that it is carried out in the respective forest management units, in compliance with provisions of Federal Law 8,987/95, according to regulations (Art. 14-C, § 5, Law 11,516/07).
The new law also allows concessions in conservation units to contemplate in their object the right to develop and market carbon credits and environmental services according to regulations to be established by specific regulations.
Changes in the law that created FNMC (Federal Law 12.114/09)
Federal Law 14,590/23 also updated Federal Law 12,114/09, which creates FNMC. The application of FNMC resources in repayable financial support, which previously occurred by means of granting of loans, through the operating agent, now occurs through the financial instruments used by the financial agent.
Federal Law 14,590/23 expanded opportunities for investors in the sector due to the new developments for carbon credit projects in forest areas.
The definitions that already existed were expanded to encompass a greater variety of assets in forest concessions and allow the exploitation of other non-timber activities. It also made it possible to transfer ownership of carbon credits from the granting authority to the concessionaire during the concession period. This may further increase interest in the exploitation and market of forest carbon credits.