Brazil regulates carbon capture and storage with new decree

The minute

President Lula signed a decree that regulates carbon capture and storage (CCS) in Brazil. The government also issued decrees covering the free energy market, low-carbon hydrogen and sustainable aviation fuel. The package signals a broader push to build regulatory frameworks for the country’s energy transition agenda.

Why it matters

Brazil has vast geological potential for carbon storage, but lacked a dedicated regulatory framework for CCS operations. By formalizing rules, the government creates legal certainty for project developers and investors looking at hard-to-abate sectors where CCS may be necessary to meet climate targets.

The simultaneous signing of decrees on the free energy market, low-carbon hydrogen and sustainable aviation fuel indicates the administration is advancing multiple fronts of energy transition policy at once, linking decarbonization goals with industrial competitiveness.

How carbon capture and storage works in practice

CCS is a three-stage process. First, CO₂ is separated from the exhaust gases of an industrial facility (a cement kiln, a steel furnace, a refinery, a fertilizer plant or a power station). Second, the captured CO₂ is compressed and transported, usually by pipeline or ship, to an injection site. Third, it is pumped into deep geological formations (typically porous rock layers capped by impermeable rock) where it remains trapped underground.

The geology matters because the storage site must hold CO₂ permanently. Suitable formations include depleted oil and gas reservoirs, deep saline aquifers and, in Brazil’s case, the pre-salt carbonate layers beneath the Atlantic seabed. Operators must demonstrate that the caprock above the injection zone can prevent upward migration of CO₂ for centuries.

Monitoring continues long after injection stops. Sensors track pressure changes in the reservoir, and periodic seismic surveys confirm that CO₂ has not migrated outside the approved storage complex. A robust regulatory framework defines who is responsible for this monitoring, how long it lasts, and when (if ever) liability transfers from the operator to the state.

Brazil’s geological context and existing operations

Brazil already has practical experience with CO₂ injection. In its pre-salt oil fields, the national oil company separates CO₂ that comes up mixed with crude oil and reinjects it into the reservoir. This serves a dual purpose: it maintains reservoir pressure (boosting oil recovery) and keeps CO₂ out of the atmosphere. The operation is one of the largest offshore CO₂ reinjection programmes in the world, though it has operated under oil-and-gas regulation rather than dedicated CCS rules.

Beyond the pre-salt, Brazil’s onshore sedimentary basins also contain deep saline aquifers that geologists consider promising for dedicated storage (where the sole objective is climate mitigation, not enhanced oil recovery). Until now, there was no permitting pathway for a project whose only purpose was to store CO₂ in those formations. The new decree is meant to fill that gap.

What the decree changes for operators

Before the decree, a company wanting to develop a dedicated CCS project in Brazil faced an undefined regulatory landscape. There was no clear authority to grant a storage licence, no standardised environmental impact assessment for subsurface CO₂ injection outside oil-and-gas operations, and no rule on long-term liability after a site is closed.

A dedicated CCS regulation typically addresses several practical questions: which government agency grants exploration and injection permits, what technical criteria a storage site must meet before injection begins, what monitoring plan the operator must follow, and what financial guarantees (bonds, insurance or reserve funds) are required to cover remediation if something goes wrong. By publishing the decree, the government signals that these questions now have, or will soon have, formal answers within Brazilian law.

The broader regulatory package

The CCS decree did not arrive alone. The three companion decrees cover areas that interact directly with carbon storage economics.

Free energy market

Expanding access to Brazil’s free energy market allows more consumers and businesses to choose their electricity supplier. For CCS projects, which are energy-intensive (compression and injection require significant power), access to competitive electricity pricing can reduce operating costs.

Low-carbon hydrogen

Hydrogen produced from natural gas with CCS (often called blue hydrogen) is one of the main commercial cases for carbon capture globally. A regulatory framework for low-carbon hydrogen in Brazil therefore depends, in part, on having CCS rules in place. The two decrees are complementary.

Sustainable aviation fuel

Brazil is a major producer of sugarcane ethanol, which can serve as a feedstock for sustainable aviation fuel (SAF). Some SAF production pathways, particularly those using biomass with CCS (known as BECCS), can achieve negative emissions. Regulating both SAF and CCS simultaneously opens the door to these integrated value chains.

Common pitfalls for those involved in CCS

The most frequent mistake in early-stage CCS projects is underestimating the time and cost of site characterisation. Drilling appraisal wells, running seismic surveys and modelling reservoir behaviour can take years before injection begins. Companies that budget only for the capture equipment and neglect subsurface due diligence often face delays or cost overruns once they discover the geology is more complex than initial estimates suggested.

A second common error is treating CCS as purely an engineering problem. In practice, CCS projects require community engagement, particularly for onshore storage where local populations may have concerns about induced seismicity or groundwater contamination. Regulatory frameworks that include public consultation requirements help projects avoid opposition that can stall or cancel them entirely.

What remains unresolved

A decree sets the broad regulatory direction, but several operational details typically require further rulemaking by technical agencies. Key open questions include the definition of pore-space rights (who owns the subsurface storage capacity beneath private or public land), the precise moment when long-term liability transfers from the operator to the government (if it transfers at all), and the integration of CCS monitoring data with Brazil’s national greenhouse gas inventory. How these details are resolved will determine whether the decree translates into actual projects or remains a framework on paper.

The interaction between CCS regulation and Brazil’s regulated carbon market (established by a separate law) is another area to watch. If stored CO₂ generates tradable credits under the national market, the financial case for CCS improves significantly. If it does not, projects will depend on voluntary markets or direct subsidies, which are less predictable.

via ClimaInfo