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The carbon market in Brazil: find out more

Concern about climate change around the world has driven the adoption of more sustainable practices. After all, it is becoming increasingly clear to everyone that reducing the impact on the environment is fundamental to maintaining the quality of life on the planet.

For this reason, one issue that has been gaining prominence in the news is the regulation of the carbon market in Brazil, as has happened in other countries. 

But what does it mean? Let's explore the topic and clear up the main doubts. Read on!

What is a carbon market?

We can say that a carbon market is a key initiative in the fight against climate change. It establishes rules on CO2 emissions, as well as allowing carbon credits to be bought and sold. This creates a scenario of greater control.

One curiosity is that although it is usually called a carbon market, this system also considers other polluting gases that are responsible for global warming. In the Brazilian context, the implementation of a regulated carbon market aims to encourage companies to look at the environmental impact they are generating, contributing to goals that are already being discussed at a global level.

Why is this important for Brazil?

Like other nations, Brazil has made an international commitment to reduce its greenhouse gas emissions. In fact, this is an extremely important environmental commitment to curb climate change and all its disastrous effects.

Having a regulated carbon market is a tool to achieve these goals effectively, speeding up the transition to a more sustainable economy. In other words, it is a pressure to adopt sustainable practices and more efficient processes.

In other cases, it ends up being an incentive even when the organization does not exceed the pre-established limits. Although companies can pass on the costs associated with buying carbon credits, growing consumer awareness is driving the preference for sustainable options.

What is PL 2148/15?

The bill was created to set limits on greenhouse gas emissions by companies. It proposes that this happen by establishing the Brazilian Greenhouse Gas Emissions Trading System (SBCE) to manage this market.

Companies that exceed these limits must offset their carbon footprint by purchasing bonds, otherwise they could be fined or receive other sanctions. Companies that don't reach these limits will benefit by receiving quotas that can be traded, i.e. sold to companies that need to offset their emissions.

The amount of GHG emissions that each company is entitled to will be represented by Brazilian Emissions Quotas (CBE) - each one is equivalent to 1 tCO2e, the same reference as a carbon credit. CBEs can be received or purchased by companies.

Who is part of the carbon market?

The reality is that all of us living on planet Earth are immersed in the carbon market in some way. As individuals or companies, we are C02 emitters and environmental responsibility must be a concern.

However, the regulation will focus on industrial activities, covering companies from all sectors, especially those with high emissions such as energy, industry and transportation. So far, the agricultural sector is outside the scope of the regulated market - something that has generated a lot of controversy.

What are the penalties?

Bill 412/22 provides for the possibility of applying warnings, fines, loss of tax benefits and financing lines, and even partial or total suspension of operational activity with deregistration.

Penalties should be aimed at organizations that fail to comply with market standards, and can reach up to 3% of the company's gross turnover. In general, companies that emit more than 10,000 tons of carbon dioxide equivalent (tCO2e) per year will be subject to this.

According to the proposal, which is being discussed in Congress and has already been approved, these companies will have to submit an emissions monitoring plan to SBCE. For those who exceed 25,000 tons a year, they will also have to send the management body a periodic report on their actions in view of their obligations.

In addition to the obligation, it is worth remembering that companies that adopt sustainable practices can strengthen their brand image and make a good return. The creation of a regulated carbon market in Brazil represents a significant step towards a more sustainable economy. This is a promising path that not only benefits the environment, but also boosts innovation and the competitiveness of Brazilian companies on the international stage.

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