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ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism) - judgment

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ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism) - petition

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ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism) - appeal

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ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism) - decision

Filing Year For Action

On August 12, 2013, ABRAGET filed a claim with a request for an injunction against the State of Rio de Janeiro. The plaintiff challenges State Decree 41,318/2008, which establishes the Energy Compensation Mechanism (ECM) as part of the Greenhouse Gas Emission Abatement Plan, in order to combat global warming and strengthen the energy supply in the State. 

The decree imposes conditions for obtaining environmental permitting aimed specifically at companies in the energy sector based on fossil fuels, at the state level. The plaintiff states that the planned changes would demand high financial costs, excessively burdening the associated plants. It alleges a breach of the federal government's competence to legislate on electric energy. It further argues that the decree is unconstitutional due to a lack of a previous law to be regulated. It also adds a request for suspension of the effectiveness of the decree. This is based on the National Policy on Climate Change - PNMC (Federal Law 12.187/2009), which, as argued by the plaintiffs, supervened the decree, emphasizing that the national law does not establish any compensation for the energy sector. It clarifies that Brazil has internalized the United Nations Framework Convention on Climate Change - UNFCCC (enacted by Decree 2652/1998), but has made a reservation regarding Annex I, so that it is outside the goals of reducing greenhouse gas emissions. ABRAGET argues that the mitigation commitment provided for in the PNMC is voluntary, and not linked to the environmental permitting process. It requests (i) the granting of anticipation of the effects to suspend the effects of the decree and (i) at the end, the judicial determination for the State of Rio de Janeiro to refrain from enforcing Decree 41.318/2008. 

In response, the defendant State pointed out on November 29, 2013 that the energy compensation mechanism was edited to mitigate and compensate for the scientifically unequivocal adverse environmental effects of energy production. It emphasized the common competence of the federative entities for the adoption of environmental protective measures, and that the member state observed the precautionary principle. The state argued that as thermoelectric plants are more polluting, the discrimination adopted by the State is in accordance with the reality of the facts, and the measure is proportional. The state argued that the decree was not incompatible with the PNMC. Finally, among other issues, it defended the legality and constitutionality of the decree and requested the dismissal of the plaintiff's request. 

On March 6, 2015, the trial court dismissed the plaintiff's request, emphasizing that the judiciary, when carrying out control of public policies, must honor the purposes of the state, given that the decree contributes to the intergenerational maintenance of a healthy environment. The plaintiff appealed reaffirming the points of the initial petition and requested the annulment of the decision. On February 7, 2017, the appellate court considered the evidence of decree's unconstitutionality to be strong, raising an incident of unconstitutionality to be resolved before the Court's Special Body. 

On September 12, 2017, within the scope of the claim of unconstitutionality, the Court's Special Body decided for the validity of the decree, emphasizing, among other issues, that it is an activity inherent to the environmental administrative function with a view to materializing protective measures for the environment. After the decision, the plaintiff stated that the discussion on the application of the decree to ABRAGET's associates remained. A decision was handed down stating that the appellant's claim - to determine the non-application of Decree 41.318/08 to its associates - is generic, not being possible to fulfill the request. In addition, the court stated that any assessment of the improper application of conditions to the contracts in force should be carried out in a separate action. Therefore, the author's appeal was dismissed. 

Subsequently, ABRAGET filed an Extraordinary Appeal, which was held inadmissible. The plaintiff filed an appeal to the Federal Supreme Court (STF). On August 7, 2018, within the scope of the Extraordinary Appeal (ARE 1.317.221/RJ), the Justice, in a monocratic decision, held that the Court has consolidated jurisprudence on the concurrent competence between the federated entities to legislate on environmental protection. Since it would be necessary to go through the factual-evidence review and the interpretation of local legislation to verify that the decree refers to environmental protection standards, and not electricity, it could not hear the case. 

The plaintiffs further filed an Interlocutory Appeal, which was denied by the 2nd Panel of the Court. The judgment became final and the case file was discharged

ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism)

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities involving the catching, processing, and selling of fish for food, recreation, and industry.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

ABRAGET vs. State of Rio de Janeiro (Decree on Energy Compensation Mechanism) - judgment

Risk

Impacted group

Fossil fuel

Greenhouse gas

Economic sector