Infrastructure and public services enable the fulfillment of basic human needs through the provision of services with economic content. Because they are essential, such services must be universally accessible. It is the essential nature of these services that justifies the State’s central role in their design and regulation, even when execution is delegated to the private sector.
This necessary leadership, however, imposes a structural challenge: there is little room to modernize and innovate, as the pace of the public sector does not keep up with rapidly evolving technological changes and social demands.
An example of this reality appears in the sole paragraph of Article 11 of Law No. 8.987/95, which determines that benefits obtained from innovations or complementary revenue in concessions must be reverted to tariff moderation. Although this may seem favorable to the user, the provision neutralizes any incentive for the concessionaire to assume the risks inherent to innovation. Without the possibility of appropriating the gains, why would the delegated operator take the risk of investing? There are ongoing legislative initiatives, such as Bill No. 7,063/17 authored by Congressman Arnaldo Jardim, which seeks to revise this framework and promote a regulatory environment more conducive to modernization and innovation. Within the Executive Branch, examples such as the implementation of free flow tolling on highways or Anatel’s approach in 4G and 5G auctions—conditioning spectrum use on the introduction of these technologies combined with universalization obligations—show that progress is possible, even if the steps are modest compared to the transformative potential that could be achieved.
To innovate in infrastructure and public services, we need innovative regulation. The same reflection applies to the challenge of sustainability.
First, we must address the obvious: infrastructure often imposes harmful impacts on the environment, yet we do not consider doing without it. Highways in the Amazon, though essential, can facilitate illegal mining and logging; ports are indispensable but affect marine ecosystems; no one denies the importance of railways, even with their own environmental liabilities.
Environmental legislation attempts to address these issues. Sustainability, however, cannot be reduced to its environmental dimension alone. The agenda is inseparable from the social dimension, and infrastructure projects bring social risks that must be managed with equal seriousness. To use the examples provided, sexual exploitation observed in port zones or road construction areas is a painful demonstration of the lack of sustainability. Truly resilient infrastructure must withstand these tests and embrace the full ESG spectrum.
On the other hand, there are public services inherently designed to protect the environment and promote citizenship. Basic sanitation directly contributes to a more sustainable reality. Even so, the issue is not simple. The recent ruling by the Brazilian Supreme Court (STF) on landfills in environmental protection areas shows that the Judiciary is also engaging with the matter, seeking solutions that reconcile environmental preservation and legal certainty.
Despite the challenges of implementing a sustainable regulatory agenda, there are ongoing efforts within direct and indirect public administration that deserve recognition. BNDES launched a climate investment platform for ecological transformation (BIP), gathering more than R$ 22 billion in projects across three main sectors. The Economic, Social and Sustainable Development Council of the Presidency of the Republic developed and presented at COP 30 a portfolio of sustainable investments, with criteria aligned with the taxonomy recently released by the federal government to identify what can effectively be considered sustainable in Brazil.
As a society, we must make a choice: either we compensate for the risks involved in having more modern and efficient services, or we settle for standard public services—cheaper, but also less modern.
If the choice is for modern and innovative public services, the regulatory objective must be clear: design frameworks that promote the introduction of innovation and encourage sustainability agendas.
What is not sustainable is expecting innovation in regulation and sustainability in public services without the willingness to bear the associated costs and risks, when present. It is necessary to combine hard regulation and soft regulation, maintaining mandatory rules, oversight, and sanctions, while keeping in mind that it is essential to introduce more incentives and grant the private sector greater freedom to organize service provision in the desired direction.
This innovative and sustainable regulation can take shape in different areas. Reforestation along highway right-of-way areas, allowing concessionaires to appropriate the carbon credits generated without compromising road safety, can add significant value in countries as large as Brazil.
The prioritization of airport slots for airlines operating less polluting aircraft introduces market incentives aligned with environmental objectives.
Tariff rewards for technologies that reduce losses in the transmission and distribution of electricity, or incentives for non-mandatory investments in reducing technical water losses in the context of water scarcity, are examples of how regulation can foster efficiency and innovation.
The challenges of innovation and sustainability in public utilities will only be overcome if regulation itself is innovative and sustainable. This is the path toward truly resilient infrastructure capable of meeting today’s demands without compromising future generations.