The growth of the carbon market and Brazil’s potential

The world appears willing to comply with the Paris Agreement, signed by 196 countries and which aims to slow down global warming. This is what data from the Ecosystem Marketplace (EM) - a leading global source of information on environmental finance, led by the non-profit organization Forest Trends - indicates, which shows large growth in the annual value of voluntary carbon market negotiations in 2021, reaching the mark of 1,98 billion dollars -- an increase of almost 300% compared to 2020, where the value was US$ 520 million.

The EM report also shows that the majority of the profit from the voluntary carbon market is found in the “forest and land use” category, totaling US$1,32 billion, an area in which Brazil has an advantage due to the large presence of forest Amazon in its territory.

A study carried out by ICC Brasil (International Chamber of Commerce) in 2021 shows that Brazil has the capacity to supply 22% of the global Carbon Market demand.

For every ton of greenhouse gases (GHG) not emitted, a carbon credit is generated, which can be sold to companies or governments in countries that need to achieve GHG reduction targets, but are unable to do so for some reason.

To participate in the carbon market, it is necessary to first calculate the organization's carbon footprint. From there, it is possible to outline strategies to reduce emissions, resulting in carbon credits for sale.

Brazil also sees this market as promising for the country and encourages it. The second notice of the Call for the Acquisition of Carbon Credits in the Voluntary Market was launched last year by the National Bank for Economic and Social Development (BNDES), with the aim of financing the development of the carbon market, encouraging quality standards for decarbonization projects.

The value is R$100 million in total, and the categories of reforestation, reduction of emissions from deforestation and forest degradation, energy and sustainable agriculture will be considered -- with contributions of up to R$25 million per project.

In 2022, Decree No. 11.075/2022 was signed by the Federal Government, establishing the basis for a regulated carbon market. However, with no plans yet to be voted on in the Chamber of Deputies, Bill 528/21 is being processed, which establishes, in fact, the Brazilian Emissions Reduction Market (MBRE).

The carbon market tends to continue growing, especially when it is regulated. However, it is important to highlight that organizations that anticipate and calculate their footprint, visualizing their potential and, if possible, participating in the voluntary market, will be ahead of the competition when regulation comes into force.

By Alessandra Gaspar Costa, executive director of APCER Brasil