Brazilian Minister Marina Silva announces correction of climate target at the UN

Brazilian Minister Marina Silva announces correction of climate target at the UN

In a speech at the Ambition Summit held by the United Nations (UN) in New York, Brazilian Minister Marina Silva announced that Brazil will correct its climate target. The Nationally Determined Contribution (NDC), which had been altered by the previous government, will now regain its original ambition stated in the 2015 Paris Agreement. With this correction, Brazil commits to reducing emissions by 48% by 2025 and 53% by 2030, compared to the previous targets of 37% and 50%, respectively.

Minister Silva emphasized that there is a false dilemma between development and poverty alleviation when it comes to combating climate change. She stated that over 3 billion people, especially in low and middle-income countries, are already directly affected by climate change, and no country should have to choose between addressing global warming or fighting hunger and poverty.

One of the main sources of emissions in Brazil is deforestation. The protection and sustainable development of forests are among the government's priorities, with a commitment to zero deforestation by 2030. The implementation of stricter enforcement measures by Ibama and ICMBio has already led to a 48% decrease in deforestation alerts in the Amazon from January to August compared to the same period last year. The fifth phase of the Action Plan for the Prevention and Control of Deforestation in Legal Amazon (PPCDAm) was launched on June 5th.

The government's task force has also successfully reduced illegal mining activities in the Yanomami territory by 80%. In August, Belém hosted the Amazon Summit, where regional countries launched a new agenda for regional cooperation. Minister Silva highlighted the importance of ensuring decent conditions for the more than 50 million Amazonian inhabitants. She stated that the Amazon now has its own voice, but addressing climate change requires a broad energy transition.

The Ministry of Finance's Ecological Transition Plan demonstrates Brazil's commitment to economic transformation. The plan includes launching sustainable sovereign bonds and regulating the carbon market in a way that benefits local populations. Brazil's potential for solar, wind, biomass, ethanol, biodiesel, and green hydrogen production will make the country an "exporter of sustainability," according to Minister Silva.

Other initiatives mentioned by Minister Silva to achieve Brazil's climate ambition include programs for the restoration of degraded areas and strengthening productive chains. The Green Grant will assist families in extreme poverty by incentivizing nature protection practices.

Recognizing the need for international action and consensus, Brazil has applied to host COP30 in 2025 in Belém. At the conference, member countries will present their second round of climate targets. Minister Silva emphasized that it will be the most important COP since the adoption of the Paris Agreement and the world's last chance to limit global temperature increase. Additionally, combating climate change will be a pillar of Brazil's presidency of the G20, which begins in December with the theme "Building a Fair World and a Sustainable Planet." The government plans to launch a global mobilization task force against climate change during its presidency.

The Ambition Summit was opened by UN Secretary-General António Guterres, who criticized the decades of delay in phasing out fossil fuels. He stressed that humanity has opened the gates to hell and that the world is on track for a 2.8°C increase in global temperature by 2100. Guterres called on developed nations to make extra efforts to reduce their emissions, emphasizing the need for swift action and stating that the future is not predetermined but can be shaped by leaders.

In addition to the UN speech, Minister Silva participated in the Basic ministerial meeting on climate change with Brazil, South Africa, India, and China. She committed to strengthening the group's leadership in climate change discussions to achieve effective actions in future conferences. She also accompanied President Lula in a bilateral meeting with US President Joe Biden and had a meeting with Germany's Minister of the Environment, Steffi Lemke. In the evening, she attended the Pororoca, a cultural event in Central Park to promote the preservation of the Amazon.

On Thursday, Minister Silva held bilateral meetings, including one with Amina Mohammed, the UN Deputy Secretary-General. The meeting focused on Brazil's strategic role in upcoming climate conferences and the opportunities provided by Brazil's presidency of the G20 for implementing the Sustainable Development Goals.

Understanding the Law of Good

The Law of Good is an instrument designed to stimulate research, development, and innovation (R&D&I) activities in Brazilian companies. It offers tax incentives to companies that invest in R&D, contributing to the country's technological development. The benefits include the deduction of R&D expenses from the calculation of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL), reduced Industrialized Products Tax (IPI) on the acquisition of goods for R&D, accelerated depreciation of new assets, accelerated amortization of intangible assets, and zero withholding tax on remittances for the registration and maintenance of trademarks, patents, and cultivars.

Organizations are increasingly seeking solutions to increase their innovation, productivity, and competitiveness. They adopt strategies to reduce costs, optimize production processes, and improve operations. Investment in R&D activities supported by projects that tackle technological challenges directly impacts job creation, as well as the country's development and competitiveness.

In addition to companies' investments, fiscal incentives that stimulate technological research, development, and innovation activities are important tools for promoting the development of productive sectors. These incentives share the technological risk inherent in the innovation process. The Law No. 11,196/2005, known as the "Law of Good," is considered the main instrument for stimulating R&D&I activities in Brazilian companies. It offers companies the possibility of using certain tax incentives, covering all sectors of the economy and regions of the country. This law effectively contributes to innovation, the development of companies' technical and productive capacity, and the increase of value added to the production of goods and services.

The fiscal incentives for R&D&I were established to encourage private investment in technological research and development, both in the conception of new products and in the manufacturing process, as well as in the addition of new features or characteristics to the product or process, resulting in incremental improvements and effective gains in quality or productivity, leading to greater competitiveness in the market. These benefits aim to stimulate the phase with the greatest uncertainty regarding the economic and financial results for companies, the creation and testing of new products, processes, or improvements to existing ones (technological risk).

The benefits apply to companies with fiscal regularity under the Real Profit Taxation Regime that engage in research and technological innovation activities. Non-refundable resources, such as economic subsidies, are not counted for the purpose of using these incentives.

The R&D activities do not necessarily need to be directly related to the company's core business. They can be classified as basic directed research, applied research, or experimental development. The definition of technological innovation used in the "Law of Good" is based on the Frascati Manual, which focuses on research and technological development activities that seek to acquire new knowledge and involve technological risks, rather than simply purchasing or contracting technology.

The Importance and Scope of Benefits:

Currently, the "Law of Good" is the main instrument for stimulating R&D&I activities in Brazilian companies, covering all sectors of the economy. It is fundamental to sustain the development of technical and productive capacity and increase the value added to the production of goods and services. This instrument applies to all companies established in the country, regardless of the origin of their capital, their area of activity, or the region where they are located, as long as they operate under the Real Profit Taxation Regime.

Companies can deduct from their net profit, for the purpose of determining the real profit and the base calculation of the Social Contribution on Net Income (CSLL), the amount corresponding to the sum of expenses incurred in the period for technological research and development of technological innovation. These expenses can be classified as operational expenses according to the legislation of Corporate Income Tax (IRPJ), payments for the execution of R&D projects contracted in the country with universities, research institutions, or independent inventors as defined by Law No. 10,973/2004, and amounts transferred to micro and small businesses as defined by Complementary Law No. 123/2006, intended for the execution of technological research and development of technological innovation activities.

The benefits provided by Article 19 of Law 11,196/2005 include:

I - Deduction of the sum of operating expenses related to R&D activities from the calculation of IRPJ and CSLL, according to the following percentages:

• Up to 60% through exclusion;
• Plus 10% for hiring researchers for R&D (increment less than 5%);
• Plus 20% for hiring researchers for R&D (increment greater than 5%);
• Plus up to 20% in the case of granted patents or cultivar registration.

II - 50% reduction of the IPI on the acquisition of goods intended for R&D;
III - Full accelerated depreciation of new assets intended for R&D;
IV - Accelerated amortization of intangible assets intended for R&D; and
V - Zero withholding tax (IRRF) rate on remittances of financial resources abroad for the registration and maintenance of trademarks, patents, and cultivars.

The "Law of Good" is a crucial tool for promoting R&D&I activities in Brazil, providing companies with significant benefits to support their innovation efforts. By incentivizing private investment in research and development, the law contributes to the country's technological development, economic growth, and global competitiveness.