Brazil’s Senate approved a significant bill to regulate the country’s carbon market. The bill now moves to the Lower House for further review, according to Valor International. The government is pushing for the bill’s enactment before the conclusion of COP29 in Baku, Azerbaijan, on November 22.
Key Provisions of the Carbon Market Bill
The proposed bill establishes rules for both mandatory and voluntary carbon markets. Companies that emit over 10,000 tons of greenhouse gases annually, including cement and oil producers, will be required to participate in the mandatory carbon market.
Under the bill, these companies must offset excess emissions by purchasing carbon credits. Non-compliance will result in penalties, such as fines up to 3% of gross revenue. Other potential penalties include the cancellation of credit trading registration, loss of credit facilities, or exclusion from government contracts for up to three years.
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Voluntary Carbon Market and Amendments
The bill also establishes a voluntary carbon market, allowing companies to sell carbon credits. The value of these credits will depend on specific projects. These include maintaining and restoring areas protected under Brazil’s Forest Code.
Agribusiness sectors, such as agriculture and livestock farming, can sell credits if they capture carbon dioxide (CO2). However, they are excluded from mandatory regulations.
A significant amendment includes adding the sanitation sector to the regulatory framework. This expansion reflects growing recognition of the sector’s role in reducing emissions.
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Distribution of Carbon Market Revenues
Under the new bill, 75% of the revenue from Brazil’s carbon market will be allocated to the National Climate Change Fund. Additionally, 5% of the proceeds will support Indigenous and traditional communities engaged in forest conservation efforts.
Landowners who participate in state programs will receive a portion of the carbon credits generated. The bill also removes the requirement for insurers to invest a minimum percentage of their technical reserves and provisions in environmental assets.
The Road Ahead
The carbon market bill in Brazil represents a major step forward in regulating emissions and incentivizing carbon credit trading. While the legislation still faces contention between the Senate and the Lower House, its passage could significantly impact the country’s efforts to reduce greenhouse gas emissions and boost environmental sustainability.
As the bill moves through the legislative process, all eyes are on Brazil as it seeks to align with international climate goals.