Law creates regulated carbon market in Brazil

Law 15.042/24 was published this week, establishing the Brazilian Greenhouse Gas Emissions Trading System (SBCE). The rule establishes a regulated carbon market in Brazil, defining limits for greenhouse gas (GHG) emissions by productive sectors and allowing the offsetting of these emissions through the purchase of carbon credits.

A relevant point is that primary agricultural production does not generate carbon credits in the regulated market. However, credits can be obtained in the voluntary market (see below) or from permanent preservation areas and legal reserves.

Rural landowners who maintain or restore these areas can obtain carbon credits. Attorney Victoria Elimelek de Weber, from the Mello Torres law firm, says that the provision is included in article 46 of Law 15.042/24.

"The possibility of issuing carbon credits based on mandatory preservation not only encourages compliance with environmental legislation, but also offers a financially attractive alternative, allowing the generation and sale of carbon credits on the market. This initiative simultaneously promotes the economic appreciation of protected areas and the strengthening of environmental conservation policies," he explains.

Voluntary market for rural producers

In addition to the regulated market, there is the voluntary carbon market. In this market, companies, organizations and individuals offset their emissions by acquiring credits. Since it is voluntary, there are specific rules and methodologies for assessment and certification. Several companies operate in this segment.

In the voluntary market, rural producers can obtain resources.

"Agricultural primary production activities that involve emission reduction actions can generate carbon credits. Law 15.042/24 allows and encourages the voluntary carbon market to operate in parallel with the regulated system, enabling non-regulated entities (such as agriculture) to participate in the carbon credit transaction. Voluntary carbon credits can be incorporated into the regulated market if they comply with the methodologies established by law," explains Victoria Weber.

Other topics and regulation

Law 15.042/24 also addresses other relevant topics, such as the definition of emission targets for different sectors, monitoring and inspection mechanisms, and Brazil's integration into global carbon markets.

In order to generate all the expected effects, however, there is a need to create other standards, sub-legal acts.

"These acts are essential to detail and operationalize the general rules provided for in the law, including aspects such as emissions calculation methodologies, criteria for generating carbon credits, monitoring and reporting mechanisms", ponders Victoria.

Carbon credits

But, after all, what are carbon credits?

These are tradable assets that represent retention, reduction of emissions or removal of one ton of carbon dioxide equivalent (tCO2e), obtained from GHG retention, reduction or removal projects or programs, subject to national or international methodologies that adopt criteria and rules for measurement.

Or, in simpler terms, they consist of assets that represent a tonne of carbon dioxide or equivalent of other GHGs that have ceased to be emitted or have been removed from the atmosphere.