Learn more about the regulated carbon market, approved by the Chamber of Deputies, and its impact on sustainable development.

This week, the bill that creates the Brazilian Greenhouse Gas Emissions Trading System (SBCE) was approved by the Chamber of Deputies, providing for the creation of a regulated Carbon Market in Brazil. Established by the Paris Agreement During COP21, this climate change combat system can be used by the government, private sector, associations and individuals to emissions offsetting of CO2.

The mechanism aims to reduce carbon emissions and transition to a green economy through the creation of Carbon Credits, equivalent to 1 ton of CO2 in the atmosphere. The system works as follows: renewable energy generation, reforestation and carbon capture projects in general, have the carbon capture and the reduction of emissions certified by organizations, which in turn attest and certify the production of carbon credits, which are sent to brokers and offered to buyers. The buyers acquire carbon credit certifications with the aim of offsetting emissions and meeting sustainable development goals.

What is the difference between voluntary and regulated carbon markets?

The mechanism for buying and selling carbon credits is very important to achieve carbon neutrality in the atmosphere, with governments and other entities playing their part in the ESG journey. To achieve these institutional and governmental goals, the application of the carbon market can be done in two ways: voluntary and regulated.

O Voluntary Carbon Market It is based on the acquisition of carbon credits without legal obligations to reduce emissions, with companies and other entities voluntarily committing to offset the CO2 dispersed into the atmosphere.

These are companies that often do this as a corporate social responsibility initiative or even in anticipation of future regulation of their activities – explains Viviane Romeiro, director of Climate, Energy and Sustainable Finance at CEBDS

Already the Regulated Carbon Market It works through legislation and agreements such as Bill 182/2024, approved by the Chamber of Deputies. In this case, companies that exceed a specific emissions ceiling determined by activity will need to acquire carbon credits to offset the excess CO2 released into the atmosphere.

“The carbon market, both regulated and voluntary, plays a very important role in the energy transition process. – Marina Grossi, president of CEBDS”

The role of CEBDS in discussions on the carbon market

Since the definition of Article 6 of the Paris Agreement During COP21, in 2015, CEBDS has been actively participating in discussions on this essential mechanism for building a NetZero future.

Since then, CEBDS has launched publications such as Carbon Pricing Guide, in partnership with the CDP, and the Position of the Brazilian business sector on the urgency of creating a regulated carbon market in Brazil, launched in 2023, with the signature of 55 companies in favor of regulating the mechanism in the country.

In addition, the institution also participated in meetings with project coordinators in Congress, and promoted events with the private sector to discuss the importance of the initiative in Brazil.

COP29 and the International Carbon Market

At the 29th United Nations Conference of the Parties on Climate Change, which is taking place this week in Azerbaijan, one of the main discussions is related to the creation of a Global Carbon Market, which would allow the trading of carbon credits between countries. The operating guidelines for this system have already been agreed upon, and foresee the internationalization of existing Carbon Credits.

In this model, developed countries or companies struggling to cut their emissions could sponsor initiatives aimed at reducing greenhouse gas emissions in developing territories. In return, countries or companies that financed these projects could exceed emissions beyond their pre-established targets.

CEBDS is participating in COP29, promoting and participating in important discussions representing the Brazilian private sector. You can find more information by accessing the HUB #CEBDSnaCOP29.

Panorama in Brazil

The approval of the SBCE has the potential to leverage the implementation of Nationally Determined Contributions (NDCs), in addition to being a way of mobilizing investment for the transition to a low-carbon economy.

The measure is in line with Brazil's potential as a leader in the global process of reducing emissions, since the country has a considerably higher renewable energy matrix than other nations. Despite everything, carbon credits would be just one piece of the puzzle of the decarbonization process in Brazil and the world, which still requires the mobilization of civil society, the private sector and the government to achieve its goals.

However, expectations for a sustainable future are good, especially with the discussions and agreements of the G20 and COP29, and the imminent COP30, which will take place in Belém, Pará, in 2025.