Brazil's proposed special sustainability program for the chemical industry (Presiq), under review in the lower house, marks a strategic shift in the country's industrial policy for the chemical and petrochemical sectors.
With the expiration of the special regime for the chemical industry (Reiq) set for 2027, Presiq emerges as a more modern alternative aligned with sustainability and innovation goals.
Reiq is a fiscal incentive mechanism that reduces VAT-like PIS/Pasep and Cofins federal taxes on feedstocks used in chemical and petrochemical production, immediately lowering operational costs for qualifying companies. In contrast, Presiq is a broader industrial policy framework still under discussion, intended to succeed Reiq with a more strategic focus.
Unlike Reiq, which focused primarily on tax relief, Presiq introduces a model based on environmental and technological commitments. The concept is straightforward: companies in the sector can access benefits if they allocate part of their resources to sustainable investment such as plant modernization, energy efficiency, emissions reduction and waste management. In addition to maintaining Reiq's tax reductions, Presiq aims to unlock further benefits such as additional tax credits for capacity expansions, access to public financing for innovation and sustainability projects and regulatory support for initiatives aligned with Brazil's reindustrialization and green chemistry priorities. This approach aims not only to revitalize the industry but also to reposition it within a global context that increasingly demands environmental responsibility.
Brazil's chemical industry currently operates at around 60pc of its installed capacity, the lowest level since the 1990s. A lack of investment, outdated technology and competition from imports have eroded the sector's competitiveness. Analysts consider Presiq to be a critical tool to reverse this trend. By encouraging modernization and innovation, the program could unlock a new growth cycle, with gains in productivity, sustainability and value creation.
Braskem, the country's largest petrochemical company, has expressed support for the program and announced investments in its Rio de Janeiro facility. The company plans to replace naphtha — its traditional and costly feedstock — with ethane derived from Brazil's pre-salt gas reserves, which is both cheaper and cleaner. This strategic shift, expected to be supported by Presiq funds, represents a move toward cleaner and more competitive production.
Braskem's new leadership under chief executive Roberto Ramos signals a broader restructuring effort. The company aims to recover market value and become more attractive for a potential sale, while maintaining controlling company Novonor, formerly known as Odebrecht, as a shareholder. Diversifying feedstock sources, including importing gas from Argentina's Vaca Muerta shale formation, is part of a strategy to reduce costs and improve efficiency.
Presiq also complements recent government efforts to protect the domestic market. Import tariffs on certain chemical products have been raised to 20pc from 12.6pc and anti-dumping duties on US-origin PVC have jumped to 43.7pc from 8.2pc. While these measures aim to curb foreign competition and support local producers, Brazil's domestic output still falls short of meeting demand. As a result, imports are likely to continue, albeit from alternative sources such as Egypt, Argentina and Colombia.
Despite a challenging global environment, marked by overcapacity and lower prices, Brazil's polymers market shows signs of resilience. Domestic demand continues to grow, albeit modestly, suggesting underlying strength in the sector and the broader economy. Without macroeconomic constraints such as high interest rates — currently at 15pc in Brazil — consumption could be even stronger.
In this context, Presiq stands out as a key catalyst. If successfully implemented, the program could stimulate investment in new production capacity, making it more modern, cleaner and better managed.
While no vote date for the Presiq bill has been scheduled, it could advance without a full floor vote unless formally challenged, positioning it as a key step toward a more strategic and sustainability-driven industrial policy.
