CCS Brasil Disputes Climate Fund Restrictions as Decree Leaves Long-Term Liability With Operators

CCS Brasil rejected recommendations from 39 members of the Economic and Social Development Council (CDESS) to restrict Climate Fund financing for carbon capture projects associated with enhanced oil recovery (EOR) or those extending fossil asset life. In an open letter issued August 20, the association argued climate policy should evaluate effective emission reductions per project rather than excluding entire technology categories. CCS Brasil founder Isabela Morbach stated the council members’ position creates “technological lock-in” specifically targeting CCS while not applying equivalent criteria to other decarbonization pathways at similar cost and maturity levels. The association challenged the council’s emphasis on EOR applications, asserting this creates “false equivalence” between one specific use case and the broader family of capture and storage technologies. CCS Brasil identified no concrete requests for Climate Fund financing of EOR projects in Brazil, arguing individual project analysis based on lifecycle emissions, additionality, and storage permanence should determine eligibility regardless of petroleum production involvement.

Separately, Decree 13.095/2026 published August 13 maintains indefinite operator liability for CO2 reservoir risks and damages even after authorization termination and monitoring obligations conclude. Morbach assessed this contradicts international models, noting Alberta transfers long-term responsibility from private operators to provincial government after operation closure and regulatory compliance, while Norway similarly provides for transfer following regulatory conditions and operator financial contributions for future monitoring costs. The decree establishes initial 20-year monitoring after injection cessation, extendable by the National Petroleum Agency (ANP) if reservoir stability and pressure front requirements remain unmet. Industry sources expressed concern the explicit liability emphasis increases economic risk for Brazilian CCS projects, though some observers noted Brazilian environmental legislation already establishes damage liability regardless of the decree provision.

The decree also mandates ANP establish conditions for shared infrastructure business models with free access, transparency, and non-discrimination principles to favor multi-user arrangements. Market specialists assessed this provision appears influenced by natural gas market opening policy but failed to account for CO2 injection complexity, as third-party volume obligations could alter technical and economic premises underpinning investment decisions.