Climate change is no longer an issue for the future. Increasingly frequent natural disasters warn of the urgency of the issue and the whole world is trying to find solutions to at least halt the advance of the evil already produced.
Within this context, and combining environmental preservation with the financial market, so-called carbon credits have emerged as an important mechanism that can help combat climate change.
What are carbon credits and how do they work?
Carbon credits, in short, are certificates that represent the reduction or removal of greenhouse gases (GHG) from the atmosphere. They can be traded, allowing companies to offset their emissions by investing in sustainable projects.
The carbon credit market was created by the Kyoto Protocol (1997) and strengthened by the Paris Agreement (2015). Both sought to set targets to limit global warming, creating such a market as a kind of incentive.
The European Union and China currently lead the carbon credit sector, which already generated US$1 billion in 2021 and could reach US$50 billion by 2030.
Brazil in the carbon market
The country is one of the largest suppliers of carbon credits, especially in forest preservation projects and agribusiness. With the National Policy on Climate Change (2009) and RenovaBio (2017), progress has been made, but comprehensive regulation was lacking until Law 15.042/24.
The new law, sanctioned this month and already in force in Brazil, brings clear rules to this market, creating opportunities for companies, investors and producers, as well as helping to mitigate the problems faced by the climate.
They stand out, for example:
- thecreation of the Brazilian Emissions Trading System (SBCE), which is a regulated market for trading carbon credits in Brazil;
- imposing mandatory participation in this market oncompanies that emit more than 25,000 tons of CO₂ per year;
- and encouraging the participation ofsmall and medium-sized producers, paving the way for them to generate income with sustainable practices.
Competitive competitive thatcome from nature
Brazil has an obvious natural advantage in the production of carbon credits due to its vast forests and rich biomes. This privileged condition has the capacity to attract many investors. It’s no wonder that experts predict that the carbon credit market in the country could be worth US$ 100 billion by 2030.
What’s more, contrary to what one might imagine, this regulation does NOT represent a threat to one of the sectors that leads the Brazilian economy: agribusiness. Practices such as reforestation, integrated crop-livestock-forestry (ILPF) and sustainable management can generate credits and increase the competitiveness of producers and the agro-industry.
With the new legislation, Brazil is positioning itself as a player player in the fight against climate change and, what’s more, has the potential to lead the global carbon market.
Investing in this sector is a unique opportunity to contribute to sustainability and obtain significant financial returns.
Doubts and questions?
If you have any doubts about the new legislation, among other matters, our Civil team is at your disposal for clarification and guidance.
