Incentivized and infrastructure debentures

The Ministry of Mines and Energy (MME) has been working intensively to attract strategic investments in the energy sector through incentivized and infrastructure debentures—financial market instruments that are consolidating their role as important tools in Brazil.

In 2024, Law No. 14,801 and Decree No. 11,964 introduced significant advances by simplifying and modernizing the regulatory framework for the issuance of incentivized debentures, while also creating a new security called infrastructure debentures, which grant tax benefits to issuing companies. For the MME, this modernization reinforces the Brazilian government’s commitment to fostering investment in the electricity sector, which continues to demonstrate resilience, strong governance, robust regulation, and legal certainty.

Incentivized and infrastructure debentures are debt securities issued by companies to finance long-term projects deemed priorities in the energy sector, as established by Laws No. 12,431/2011 and No. 14,801/2024, as well as Decree No. 11,964/2024.

These securities offer attractive tax incentives to investors: exemption from withholding income tax for individuals, or a reduced 15% tax rate for legal entities (incentivized debentures); or, in the case of infrastructure debentures, deduction of interest payments from the calculation base of Corporate Income Tax and Social Contribution on Net Income.

For both types of securities, the requirement for prior ministerial approval of project classification in the sectors listed under Decree No. 11,964/2024 has been waived. Responsibility for information provision, protocol filing, and compliance with legislation lies solely with the project owner/issuer. Prior ministerial approval remains mandatory only for public service projects owned by subnational entities.

Before contracting a financial agent to structure a fundraising operation, the project owner or issuer must submit the project documentation to the MME, demonstrating compliance with legal requirements.

To clarify procedures and required documentation in each sector, the MME has created a dedicated guidance page: gov.br/mme/projetos-prioritarios

According to 2024 legislation, within the scope of the sectors covered by the MME, the following types of projects are eligible for the issuance of incentivized and infrastructure debentures:

1. Energy

• Generation from renewable sources, transmission, and distribution of electricity

• Distributed mini-generation

• Natural gas

• Production of biofuels and biogas, except for the agricultural phase

• Production of low-carbon synthetic fuels

• Low-carbon hydrogen

• Carbon dioxide capture, storage, transport, and use

• Pipelines for transporting fuels, including biofuels and low-carbon synthetic fuels.

2. Processing of strategic minerals for the energy transition

OIL, NATURAL GAS, AND BIOFUELS

On December 11, 2024, the Ministry of Mines and Energy (MME) issued an ordinance regulating the procedures for classifying priority projects in the natural gas, biofuels, biogas, low-carbon synthetic fuels, and fuel transportation pipeline sectors.

The ordinance establishes detailed criteria for projects to qualify as priority and, therefore, be eligible to issue these securities. With the new rules, the debenture issuance process has become more agile, eliminating the need for a specific ordinance to approve each project individually.

The MME is responsible for informing applicants whether the requirements established by law, decree, and applicable regulations have been met. Proponents must submit all required documentation for review to the MME’s National Secretariat of Petroleum, Natural Gas, and Biofuels (SNPGB). If any pending issues are identified, applicants will be notified and granted 30 days to address them. Importantly, once the protocol is filed, proponents may already begin discussions with financial agents and proceed with structuring fundraising operations.

For projects involving public services owned by subnational entities—such as the provision of local piped gas services—prior approval through the publication of an ordinance remains required, but under a simplified procedure.

This regulation is aligned with Law No. 14,801/2024, which introduced a new framework for infrastructure financing, and with Decree No. 11,964/2024, which consolidated the legal basis for issuing securities with tax benefits.

The rule also simplifies the classification of state and municipal projects, fostering increased investment in infrastructure. This model is well regarded by the market and, with the new measures, is expected to attract even more investors, reducing the cost of capital and amplifying the economic and environmental benefits generated by the projects.

ELECTRICITY TRANSMISSION AND DISTRIBUTION

Current regulatory ordinances remain valid insofar as they do not conflict with Decree Nº. 11,964/2024. Accordingly:

Transmission – Projects must be included under Article 1, §1 [except items VI and VII], of MME Ordinance Nº. 364/2017 and comply with Article 2 documentation requirements (https://bit.ly/4aALE0H);

Distribution – Projects must comply exclusively with Articles 1 and 2 of MME Ordinance Nº. 245/2017 (https://bit.ly/4cSr3an).

ANEEL TRANSMISSION AUCTION

On November 6, 2023, when approval through the publication of an ordinance was still required, the Ministry of Mines and Energy (MME) classified the electric power transmission infrastructure projects tendered in the first transmission auction of 2023 by the National Electric Energy Agency (Aneel) as priority projects for the issuance of incentivized debentures.

The approval came one month after the signing of the concession contracts resulting from the largest transmission project tender ever held by Aneel in absolute numbers.

The purpose of this auction was to build 6,185 kilometers of transmission lines and substations, with an estimated investment of R$ 15.7 billion across the states of Bahia, Espírito Santo, Minas Gerais, Pernambuco, Rio de Janeiro, and Sergipe.

ETHANOL AND BIOMASS

As an example of projects approved for the issuance of incentivized and infrastructure debentures, on February 29, 2024, the MME classified as a priority the Irrigated Ethanol Project of the company Bioenergética Vale do Paracatu. The project involves investments to maintain ethanol and biomass production for the 2022/2023 and 2023/2024 harvests.

The company reported that the project will involve renovation, modernization, and increased productivity of sugarcane fields. To this end, an estimated allocation of R$ 616 million was planned, with R$ 100 million authorized to be raised with tax incentives for investors supporting the financing.

The industrial plant is a mixed unit that uses shared biological assets to produce sugar, ethanol, and electricity from sugarcane milling residue. The company’s production capacity per harvest is:

6.3 million bags of sugar

130 million liters of ethanol

360,000 MW of electricity generation

In terms of planted area, the project covers approximately 22,000 hectares of cultivated and irrigated land.

Energy from biomass is recognized as a renewable energy source and contributes to the security of Brazil’s energy supply. The country is one of the world’s largest producers and consumers of biofuels, particularly ethanol and biodiesel. These renewable fuels play a key role in reducing dependence on fossil fuels.

Currently, sugarcane biomass is the second-largest energy source in Brazil, behind only oil and its derivatives. Another important contribution of biomass is its role in reducing greenhouse gas emissions. Unlike fossil fuels, whose combustion releases large amounts of CO₂ into the atmosphere, biomass emits only the carbon that was previously absorbed by plants during their growth. Its use, therefore, contributes to mitigating climate change and advancing a low-carbon economy.

PROJECTS

2023 – A total of 33 energy transmission projects and 23 distribution projects were approved as priority initiatives, with a combined value of R$ 15.8 billion. These included the winning projects from Auction No. 001/2023 conducted by the National Electric Energy Agency (Aneel).
Q1 2024 – Two electricity distribution projects were approved as priorities, totaling R$ 3.74 billion. It should be noted that, with the publication of Law No. 14,801/2024 and Decree No. 11,964/2024, as of April 2024 prior approval by sectoral ministries was no longer required for classification as priority projects, including electricity transmission and distribution.
Biofuels (2024) – Before Decree No. 11,964/2024 came into force, four ordinances were published classifying projects focused on sugarcane field planting and renewal, totaling R$ 1.65 billion, with companies expecting to raise R$ 711 million. Under the new decree, 11 projects were filed, representing expected investments of R$ 5.37 billion and targeted fundraising of R$ 3.7 billion.
2023 Renewable Energy Projects – 178 projects were approved as priorities, totaling 7.43 GW of installed capacity, before Decree No. 11,964/2024 came into force. Photovoltaic projects accounted for 58% of approvals, while wind projects represented 37.6%. The states with the highest number of approvals were Bahia (47 projects), Minas Gerais (33 projects), and Piauí (26 projects).
2024 Renewable Energy Projects – 24 projects were approved before Decree No. 11,964/2024 came into force, totaling 1 GW of installed capacity. All approved projects were photovoltaic plants.
2024 Priority Filings – 597 projects were filed in the sectors of renewable electricity generation, natural gas-fired thermo-electric plants, and distributed mini-generation. Of these, 44% correspond to distributed mini-generation projects.

DATES

10/30/2023 – Electricity transmission projects from Aneel Auction No. 01/2023 approved as priorities

01/09/2024 – Publication of Law Nº. 14,801/2024, establishing infrastructure debentures

03/26/2024 – Publication of Decree No. 11,964/2024, regulating criteria and conditions for classifying and monitoring priority investment projects under incentive debentures, revoking Decree No. 8,874/2016

06/2024 – Publication on the MME website of a step-by-step guide and FAQ section with detailed instructions for priority project protocols in renewable electricity generation, natural gas-fired thermoelectric plants, and distributed mini-generation

12/10/2024 – Publication of Normative Ordinance GM/MME No. 93/2024, detailing complementary criteria and conditions for classification, approval, and monitoring of projects under the National Secretariat of Petroleum, Natural Gas, and Biofuels (SNPGB).

Published: November 12, 2025

Photo credit: Getty Images