Lula’s government promotes energy transition at COP 29, while raising taxes to curb the growth of photovoltaic solar energy

The increase in the tax on photovoltaic solar panels contrasts with the climate commitments assumed internationally by Brazil.

During the United Nations Conference on Climate Change (COP 29), held in Azerbaijan, the Brazilian government highlighted its commitment to the energy transition. However, a recent internal decision generated criticism from experts and sectors of society. The publication of GECEX Resolution No. 666, dated November 12, 2024, increased the import tax on photovoltaic modules from 9.6% to 25%, in addition to revoking previously established quotas.

The Brazilian Association of Photovoltaic Solar Energy (ABSOLAR) evaluated the measure as a contradiction between environmental discourse and administrative practice. According to the entity, the increase in the tax could make solar energy more expensive for consumers, cause a drop in investments in the sector, increase inflation, generate capital flight and cause the closure of companies, with the consequent loss of jobs.

A study by ABSOLAR identified at least 281 photovoltaic plant projects at risk. These projects total more than 25 gigawatts (GW) of installed capacity and represent an investment of R$ 97 billion until 2026. The realization of these projects could create more than 750 thousand jobs and avoid the emission of 39.1 million tons of carbon dioxide.

The entity highlighted that the measure compromises the financing of large plants, which depend on imported equipment to meet the standards required by investors. Currently, the national industry does not have the technical or productive capacity to meet domestic demand, with an annual production capacity of just 1 GW, while imports in 2023 exceeded 17 GW.

In addition, the national industry is limited to the assembly of photovoltaic modules, using imported inputs, which makes it less competitive in the market.

“The tax increase directly affects jobs in the distribution, marketing and installation of photovoltaic systems, which represent 28 of the 30 jobs generated by the sector,” said Ronaldo Koloszuk, president of the Board of Directors of ABSOLAR.

The government’s decision comes at a time when Brazil seeks to consolidate its position as a leader in renewable energy. Experts point out that the measure could weaken the competitiveness of the Brazilian solar sector, increasing dependence on non-renewable energy sources and compromising the climate objectives presented internationally.