{"id":3237,"date":"2024-06-19T09:28:53","date_gmt":"2024-06-19T12:28:53","guid":{"rendered":"https:\/\/oxxy2.com\/?p=3237"},"modified":"2024-06-19T09:29:38","modified_gmt":"2024-06-19T12:29:38","slug":"brazil-betting-big-on-carbonmarket","status":"publish","type":"post","link":"https:\/\/oxxy2.com\/pt\/brazil-betting-big-on-carbonmarket\/","title":{"rendered":"Brazil: Betting Big on Carbonmarket"},"content":{"rendered":"

Brazil is creating what could be the first \u2013 and biggest \u2013 carbon credit market in Latin America. Progress, however, has been slow and the challenges large, from including the hesitant agribusiness sector to properly verifying carbon offsets in the Amazon rainforest.<\/em><\/p>\n

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The stakes are high but progress has been slow for developing what could be one of the world\u2019s largest carbon credit markets.\u00a0 \u201cSome surveys claim that Brazil may account for 15% of the global market for carbon credit,\u201d says Luiza Aguiar, an ESG researcher at XP Investimentos, a Brazilian bank. \u201cBrazil may assume a relevant role in this market.\u201d Brazilian lawmakers have been debating a bill to regulate the carbon market and create a mandatory emissions trading system. This is a milestone for investors looking for regulation. But hopes that it would be approved before the United Nations Framework Conference on Climate Change in Dubai in December 2023 were frustrated. While swiftly passed by the Senate in October 2023, it has since languished in the lower house. A vote is not expected now until 2024. Once approved, however, this will make carbon credits an asset class in Brazil. Market operators will receive emissions quotas, each equivalent to one metric ton of carbon dioxide equivalent (tCO\u00b2e). Companies with emissions higher than the 25,000 tCO\u00b2e threshold must prove they hold these emissions quotas and verified emission reduction certificates in line with their emissions.\u00a0 In many cases, this process will involve buying credits on the carbon market.\u00a0 \u201cIn the voluntary market you mainly find REDD+ projects to avoid deforestation, whereas in Asia, for instance, most projects are geared towards renewable energy,\u201d Aguiar says. A REGULATORY BOOST Candido Bracher is optimistic about the potential for trading carbon credits in Brazil. A former CEO of Ita\u00fa Unibanco, Brazil\u2019s largest bank, Bracher views the pending legislation as \u201ca first step to create awareness and to stimulate solutions for emissions reductions.\u201d<\/p>\n

\u00a9 2024 Latin American Financial Publications, Inc. Copying articles to share with others is a breach of LatinFinance\u00a0https:\/\/latinfinance.com\/magazine\/2024-q1\/2024\/01\/01\/carbon-credits-brazil-preps-carbon-market\/<\/a>\u00a0.<\/p>\n

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\nCandido Bracher, ex-CEO, Itau Unibanco<\/h6>\n

The second step would be \u201ccompensation and moving towards controlling and cutting emissions,\u201d he says. Bracher adds that the creation of the carbon credit market would also increase the use of nature-based solutions in Brazil, or actions that protect and restore natural ecosystems like coastal habitats, forests and mangroves, helping to increase carbon storage to offset and reduce emissions. These projects create nature-based credits.<\/p>\n

\u201cThe potential for capturing nature-based solutions is enormous,\u201d he says.\u00a0 Broadly speaking, the carbon market legislation would help Brazil meet its climate targets of reducing emissions by 50% below 2005 levels by 2030 and reaching climate neutrality by 2050. But the legislation itself has some loopholes. The bill, for example, was modified to exempt the agribusiness sector from the future regulation following complaints by the powerful Agricultural Parliamentary Front in Congress. The agribusiness sector, which is vital to the Brazilian economy, accounts for around a quarter of carbon emissions, but its lobby group says the current measurements are unreliable.\u00a0 If and when approved, the regulations will not be implemented immediately. According to the bill, the mandatory emissions trading system may not be fully operational before 2027. A REGIONAL CHALLENGE Elsewhere in Latin America, the examples of good carbon credit regulations are few and far between. Only Mexico has a cap-and-trade emissions trading system in parallel with carbon taxation, a system used in Europe. Costa Rica launched a voluntary market and signed a letter of intent with the World Bank-administered Forest Carbon Partnership Facility in 2023 to negotiate an emission reductions payment agreement worth up to $63 million. In Brazil, there have been some encouraging signs in the voluntary market. In September, Petrobras purchased 175,000 credits on the voluntary market to be compensated in the Amazon forest. The state-run oil company is estimated to have paid $5.71 per credit, while credits on the regulated market in other countries may reach $50, including land acquisition, observers say. Petrobras says the credits will be used to make up for one year of carbon emissions to produce its premium Podium fuel.\u00a0 \u201cIt suits the purpose. You buy compensation, so your product is becoming more expensive and less attractive. These are positive market mechanisms,\u201d says Bracher. \u201cIt raises the awareness of who it is emitting.\u201d Petrobras says it aims to spend at least $120 million in carbon offsets through 2027. As the largest company in Brazil, this may pave the way for others to follow.\u00a0 \u201cBrazil may use the strength of Petrobras to move the market,\u201d says Artur Ferreira, a partner in Global Forest Bond, a Brazilian green financing company. Brazil may use the strength of Petrobras to move the market. ARTUR FERREIRA, GLOBAL FOREST BOND As a large oil producer, Petrobras also is one of the country\u2019s largest polluters in Brazil at nearly 62 million tons CO\u00b2e in 2022, according to B3, the Brazilian stock exchange. It is trailed by two steelmakers \u2013 Companhia Sider\u00fargica Nacional and Gerdau \u2013 and the petrochemical producer Braskem, each with a bit more than 10 million tons of CO\u00b2e. When considering the ratio between emissions and gross sales, the power generation companies Eneva and Engie Brasil Energia top the list, followed by SLC Agr\u00edcola, a leading agribusiness.\u00a0\u00a0 A CARBON EXCHANGE? Despite the efforts to pass the carbon market bill, this regulation may not be the panacea for trading carbon credits.\u00a0 \u201cCarbon credits have become a financial tool in the hands of traders. There are already one or two stock exchanges that are trying to set up operations in Brazil,\u201d says Jean-Pierre Cantaux, CEO of Canop\u00e9e, a French company that develops reforestation projects in the Amazon and finances parts of its activities with carbon credits. Beyond B3, another project called B4 is being set up to focus on carbon credits.\u00a0 \u201cThey intend to use blockchain technology to trade digital assets backed by carbon credits issued by companies,\u201d says XP\u2019s Aguiar. This may lead to the creation of a secondary market, which would attract financial investors, she adds. There have been serious hiccups, though.\u00a0 The credibility of the carbon credit market has been dented when flaws in the certification process have been unveiled by the media.\u00a0 Verra, a Washington, DC-based certifier of voluntary carbon offsets, has a dominant position in the Brazilian market, but its certification methods have not yet been adapted for rainforests.\u00a0 \u201cHere, the same land may be registered under the names of 15 different owners,\u201d Cantaux says. \u201cOur company was looking for a property of Boca do Acre [in the Amazon] but we found out it was actually owned by drug traffickers.\u201d\u00a0 The Guardian, a UK newspaper, recently exposed the flaws in Verra\u2019s certification, saying that rainforest carbon credit schemes are misleading and ineffective. More recently, the flagship French daily Le Monde also denounced an alleged fraud involving several multinational companies and a fake conservation project known as Patel Para in the Amazon region.\u00a0 \u201cThere may have been some exaggerations,\u201d says Global Forest Bond\u2019s Ferreira. \u201cBut Verra has to reinvent itself and improve governance and transparency.\u201d That likely will be the new push in the carbon credits market.\u00a0 Sustainable Fitch, a sister company of Fitch Ratings, says that \u201cthe selection of carbon credits will become an increasingly meticulous process to assess the best tradeoff between carbon credits\u2019 cost and their quality to mitigate greenwashing risks.\u201d The road toward a reliable carbon credit market may still be a long one. LF<\/p>\n

https:\/\/latinfinance.com\/magazine\/2024-q1\/2024\/01\/01\/carbon-credits-brazil-preps-carbon-market\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Brazil is creating what could be the first \u2013 and biggest \u2013 carbon credit market in Latin America. Progress, however, has been slow and the challenges large, from including the hesitant agribusiness sector to properly verifying carbon offsets in the Amazon rainforest. The stakes are high but progress has been slow for developing what could be one of the world\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":3238,"comment_status":"open","ping_status":"open","sticky":false,"template":"elementor_header_footer","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3237","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/posts\/3237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/comments?post=3237"}],"version-history":[{"count":1,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/posts\/3237\/revisions"}],"predecessor-version":[{"id":3240,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/posts\/3237\/revisions\/3240"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/media\/3238"}],"wp:attachment":[{"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/media?parent=3237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/categories?post=3237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oxxy2.com\/pt\/wp-json\/wp\/v2\/tags?post=3237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}