The Eco Invest Brasil program, aimed at mobilizing private investment for projects related to the ecological transition, will have a specific regime for innovation funds. The National Monetary Council (CMN) approved, this Thursday (30), changes to the rules that enable the fifth auction of the program, which aims to finance modernization projects in six sectors related to the green economy, says a note from "Agência Brasil"According to the government, the changes aim to adapt the regulations to new financial instruments focused on financing innovation, as well as to improve operational rules identified during the implementation of the program's initial stages.
What changes
The new rules establish, for the first time, a timeline for the resources raised by innovation funds to be effectively invested in the supported projects.
The schedule will be as follows:
25% of the resources must be applied within 24 months. Another 25% must be invested within 36 months. The remaining 50% will have a term of up to 60 months. In practice, this means that half of the investments must be applied in the first three years, with the completion of all contributions occurring within five years. According to the CMN (National Monetary Council), the measure seeks to provide greater predictability in the use of resources and ensure that the capital raised is allocated to projects within a defined schedule.
Defined limits
The resolution also establishes specific rules for the remuneration of financial institutions involved in the operations of Innovation Funds. The main limits are: Remuneration of up to 2% per year for the financial institution that provides resources to the funds; Remuneration of 1% per year for resources from the Eco Invest Brasil Line, as in other calls for proposals; Ceiling of 3% per year for operations carried out with resources from the line. The same limit of 3% per year also applies to the return on the so-called catalytic capital quota, acquired by financial institutions. The sum of the two remunerations must be up to 3% per year, with the percentage of remuneration for the financial institution defined on a case-by-case basis, according to the characteristics of each fund. Catalytic capital represents public resources used to attract private investment, through the model known as blended finance. In this format, the government reduces part of the risks of operations to stimulate the participation of private investors. According to the government, these limits preserve the role of public resources as an instrument for reducing risks to attract private investment, preventing them from being used primarily to increase the profitability of financial institutions.
How it works
In some operations, funds may invest in companies through financial instruments that can later be converted into equity participation. In these cases: Minimum remuneration will be equivalent to inflation as measured by the Broad National Consumer Price Index (IPCA), plus 1% per year. There may be additional remuneration if the project performs above expectations. In practice, the model allows investors to share in the gains obtained if the financed companies appreciate in value over time.
Sectors served
The new innovation funds will be allocated to financing projects considered strategic for the ecological transition and technological development of the country. Among the segments covered are: Green fertilizers; Advanced green fuels; Industrial automation and artificial intelligence applied to production; Beneficiation of critical minerals; Battery systems and energy storage; Green chemistry, biomaterials, and reuse of mineral waste. The expectation is that these investments will contribute to increasing the competitiveness of Brazilian industry and stimulating technologies aimed at reducing greenhouse gas emissions.
What is it
Created to attract private capital, including international capital, for sustainable projects in the country, the Eco Invest Brasil Line is part of the National Fund on Climate Change (FNMC). In addition to financing, the program offers exchange rate protection and risk-sharing mechanisms, reducing costs for investors and expanding access to long-term resources for initiatives linked to the low-carbon economy.
Who decides
The National Monetary Council (CMN) is the body responsible for defining the guidelines for monetary, credit, and financial system policy in Brazil. Currently, the council is composed of the Minister of Finance, Dario Durigan, who chairs the council; the President of the Central Bank, Gabriel Galípolo; and the Minister of Planning and Budget, Bruno Moretti. With the updated rules, the government seeks to provide greater legal certainty and predictability to investments foreseen in the Eco Invest Brasil Line, while simultaneously expanding financing instruments for innovation projects focused on ecological transition and sustainable industrial development.
This text was translated by machine from Brazilian Portuguese.