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UPDATE 1-Brazil's lower house passes bill to ease environmental permits

(Adds quote from KLP, Co-op)

BRASILIA, May 13 (Reuters) - Brazil’s lower house of Congress has approved a bill fiercely contested by environmental groups that would loosen licensing requirements for infrastructure, mining and farming projects.

The move drew criticism from conservation groups and sustainability-focused companies at a time when Brazil’s environmental record is under intense scrutiny as deforestation in the Amazon rainforest soars.

“If this dangerous bill passes in the Senate, it will show that the government is actively seeking to accelerate along its current path towards mass environmental destruction,” said Kiran Aziz, an investment analyst for KLP, Norway’s largest pension fund, with more than $80 billion in assets under management.

The U.K. supermarket chain Co-op said in a statement it would reconsider using Brazilian agricultural commodities if the bill becomes law.

U.S. President Joe Biden’s administration is in talks with Brazil to possibly fund conservation efforts, but has demanded that the country first show results in reining in destruction.

The licensing bill, which was approved late on Wednesday, will next pass to the Brazilian Senate for consideration.

For many types of projects it would allow for permits to be automatically issued if the applicant meets certain filing requirements. That would include projects like repaving existing highways in the Amazon that were built by the military dictatorship and have fallen into disrepair.

Brazilian President Bolsonaro has pledged to repave one such road here that a scientific study predicts will increase deforestation by five times through 2030, leading to the clearance of an area larger than Florida.

Proponents of the bill include Brazil’s powerful agricultural caucus in Congress. They argue that byzantine environmental permitting rules stymie investment and hinder economic growth of the natural resource-rich country.

While its backers say that the bill will do away with licensing on certain types of projects which are deemed low risk, environmentalists say it will open the floodgates to environmental degradation.

Dozens of non-governmental organizations on Wednesday signed a letter to the Organization for Economic Co-operation and Development (OECD), which Brazil hopes to join, expressing concerns about its environmental policies, including the bill.

Nine former environment ministers issued an open letter on Monday opposing the bill, acknowledging that an overhaul was needed, but citing a long list of problems with the proposal which they said would deal a “death stroke” to licensing as a tool to ensure sustainable development. (Reporting by Jake Spring; Editing by Alexander Smith and Diane Craft)

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