Brazil’s Push for a Regulated Carbon Market Amidst Political and Industry Hurdles
Brazil aims to establish regulated carbon market. However, Government and industry leaders are determined to have a legal framework in place by the 30th UN Climate Change Conference (COP30), scheduled for November 2025 in Belem. If enacted, the framework will introduce a cap-and-trade system targeting high-emission sectors like steel, aluminium, cement, and agriculture, pushing these industries to adhere to mandatory emissions caps.
Progress towards Legislation
Brazil’s legislative efforts on carbon emissions are longstanding, beginning as early as 2009. The most recent progress came in December 2023 when Brazil’s Chamber of Deputies passed a bill to regulate emissions. This legislation aimed at entities emitting over 10,000 metric tons of CO₂ annually. It excludes some high-emission agribusiness activities like fertilizer production. The bill is now under Senate review, where amendments may require it to be sent back to the Chamber for further deliberation.
Federal Deputy Arnaldo Jardim, an advocate for environmental policies, remains optimistic that the Senate could pass the legislation by the end of this year, despite delays from municipal elections. Jardim emphasized that the new law will require companies to meet obligatory carbon emissions targets rather than voluntary carbon credit trading.
Industry Resistance: The Agribusiness Sector
Brazil’s agribusiness sector, a major greenhouse gas contributor, has been hesitant to endorse the carbon market bill. Raphael Niemeyer from the São Paulo-based law firm noted challenges in accurately measuring net emissions in this sector as a primary reason for its reluctance. In 2021, agribusiness activities, including beef production and deforestation, accounted for approximately 74% of Brazil’s 2.4 billion metric tons of CO₂-equivalent emissions, according to Brazil’s Climate Observatory.
Aligning with Climate Goals
Brazil’s push for a carbon market aligns with its climate objectives to reduce greenhouse gas emissions by 50% from 2005 levels by 2030 and to achieve net-zero by 2050. Deforestation reduction efforts have already contributed to a minor decrease in overall emissions, underscoring the country’s commitment to its climate goals.
Learning from International Models
Brazil’s proposed framework draws inspiration from the European Union’s Emissions Trading System (EU ETS), which has become a global model for regulating emissions. By adopting a similar system, Brazil aims to introduce carbon pricing to help industries understand the financial impacts of emissions on their operations. While such systems can boost government revenues, relatively few countries have adopted these mechanisms, suggesting challenges in widespread implementation. Broad stakeholder engagement including industries, environmental groups, and indigenous communities, is crucial to gain support and address local environmental and social priorities.
Carbon Pricing in a Global Context
Global carbon pricing remains inconsistent, with significant disparities among countries. For example, carbon permits under the EU ETS are about six times more expensive than compliance prices in China, illustrating the variability in carbon costs worldwide.
Path towards regulated carbon market
Brazil’s regulated carbon market proposal is a crucial step toward achieving its climate goals. Although legislative and industrial challenges persist, a well-defined, adaptable emissions trading system has the potential to make Brazil a leader in South American climate policy, driving emissions reductions while balancing economic growth.
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Prachi, an accomplished Chief-Editor at The Sustainable Brands Journal, has 15+ years of experience in Europe, the Middle East, and India, managing 90+ global sustainable brands. She’s a prolific writer in sustainability, contributing to various publications. Prachi’s unwavering passion and expertise make her a recognized authority, driving positive change and inspiring a sustainable future.
