Energy Advisor

Fernando Xavier and Leonardo Martins, partners at Machado Meyer: “There is a broad consensus that an indiscriminate tax exemption over fossil fuels is not a good policy. In addition to the negative impact on the country’s fiscal stability, it creates an anachronic incentive to consumption of fossil fuels at a time when the world is engaging huge efforts on energy transition to a greener economy. It also fails to differentiate those sectors of economy that mostly demand government protection (such as public transportation, essential logistics and low-income families) from sectors that are more capable of absorbing price fluctuation. A better policy for fuel pricing would need to consider how to direct federal revenues to those sectors more in need of protection, while at the same time creating the kind of incentives to boost the country’s transition to a more renewable energy matrix. Therefore, …”