On Wednesday, Brazil passed Law No. 15,042, which institutes the Brazilian Greenhouse Gas Emissions Trading System (SBCE). This regulatory framework establishes a robust carbon pricing system aligned with international climate change mitigation goals, consolidating Brazil as one of the global leaders in the transition to a low-carbon economy.
With the creation of the SBCE, Brazil is advancing its climate policy by adopting market instruments that encourage the reduction of emissions and the sustainable use of its natural resources. This article details the main points of the new legislation, explaining how the carbon market will work in the country and what its implications are for society, the environment and the economy.
What is the SBCE?
The SBCE is a regulated environment for trading carbon assets, such as Brazilian Emission Quotas (CBEs) and Verified Emission Reduction or Removal Certificates (CRVEs). These securities, representing one ton of carbon dioxide equivalent (tCO₂e), can be purchased, sold or used to offset emissions, allowing regulated companies and sectors to meet established targets.
The legislation determines that the system will be implemented in five phases, over six years, with the aim of providing an orderly transition for regulated companies and sectors. Initially, the regulations and monitoring structure will be developed so that operators can subsequently measure their emissions and participate in the market.
In addition, the law provides for two market segments:
Regulated Market: Covers sectors that emit more than 10,000 tCO₂e per year. These companies must monitor, report and offset their emissions through CBEs or CRVEs.
Voluntary Market: Aimed at organizations and individuals who wish to neutralize their carbon footprint spontaneously. This market offers great potential in Brazil, considering the abundance of forest areas suitable for carbon capture projects.
How Does the Carbon Market Work?
Regulated Assets
The two principal assets constituting the SBCE (Brazilian Carbon Emission System) are:
Brazilian Emission Quotas (CBEs): These represent a right to emit greenhouse gases. CBEs are issued by the SBCE managing authority and may be granted either free of charge or through paid mechanisms, such as auctions.
Certificates of Verified Emission Reduction or Removal (CRVEs): These correspond to actual emission reductions or atmospheric gas removals, verified by independent entities and duly registered in the system.
At the conclusion of a commitment period, each regulated operator must demonstrate that their net emissions have been offset using these assets. Non-compliance will result in financial penalties and administrative restrictions.
Implementation Phases
The implementation of the SBCE will proceed as follows:
Initial Regulation (12 to 24 months): Development of rules and technical infrastructure.
Operationalization (12 months): Companies implement systems for emissions reporting.
Emission Reporting (2 years): Companies submit monitoring plans and emission reports.
First National Allocation Plan: Initial free distribution of CBEs and activation of the carbon market.
Full Implementation: Transition to comprehensive trading of assets in the market.
Monitoring and Verification Mechanisms
To ensure market integrity, participating companies must implement monitoring plans encompassing measurement, reporting, and verification of their emissions. This data will be recorded on a centralized platform, the SBCE Central Registry, which will also track transactions carried out within the system.
Economic and Environmental Impacts
Law No. 15,042 aims to align emission reduction efforts with sustainable economic growth. Its primary benefits include:
International CompetitivenessThe introduction of a carbon market positions Brazil ahead of external regulations, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on high-emission products. Brazilian exporters will be able to utilize CBEs (Carbon Emission Certificates) and CRVEs (Verified Carbon Reduction Credits) to demonstrate compliance with international standards.
Innovation IncentivesRevenue generated from trading CBEs will be allocated to the National Climate Change Fund, supporting decarbonization projects. These include investments in low-carbon technologies and fostering innovation within regulated sectors.
Credit Generation in Forest AreasActivities such as reforestation, native vegetation conservation, and ecological restoration will generate carbon credits, introducing new income streams for traditional communities, rural landowners, and forestry sectors. This mechanism enhances Brazil’s biodiversity value while contributing to climate change mitigation.
Benefits for Local CommunitiesThe law establishes socio-environmental safeguards ensuring the involvement of indigenous and traditional communities in carbon projects. It guarantees equitable financial benefit distribution and promotes sustainable management of their territories.
Flexibilities and Exceptions
Certain economic sectors have been granted specific exemptions, such as:
Agriculture: It will not be directly regulated within the scope of the SBCE, though sustainable practices are strongly encouraged.
Basic Sanitation: Companies adopting advanced technologies to neutralize emissions may be exempt from certain regulatory obligations.
This approach ensures the avoidance of disproportionate impacts on essential sectors while simultaneously fostering incentives for more sustainable practices.
Brazil’s Role in the Global Landscape
With the implementation of the SBCE, Brazil consolidates its position as a global leader in the fight against climate change. By integrating environmental preservation policies with economic development strategies, the nation underscores its commitment to the Paris Agreement, which aims to limit the increase in global temperature to 1.5ºC above pre-industrial levels.
Furthermore, the country's vast expanse of forests and unique biomes, such as the Amazon and the Atlantic Forest, position Brazil as one of the world's foremost markets for carbon credits. This legislation, therefore, represents a strategic opportunity to boost the green economy and attract international investments.
Law No. 15.042 ushers in a new era in Brazilian climate policy. Beyond mere regulation, it signifies a transformative opportunity for the nation, enabling Brazil to leverage its natural advantages and address its environmental challenges through innovation, competitiveness, and global leadership.
The Role of ACC.
In this context, Amazon Connection Carbon closely monitors the implementation of the SBCE and diligently prepares for the new dynamics of the carbon market, expected to take effect in 2025. The company already adheres to the best sustainability practices and stands ready to assist businesses and individuals in adapting to this new regulatory framework, solidifying its position as a benchmark in nature-based solutions, decarbonization strategies, and carbon credit trading.
Through the SBCE, Brazil reaffirms its pivotal role in building a sustainable future, where the balance between economy and environment will serve as a cornerstone for upcoming generations. Amazon Connection Carbon remains steadfast in its commitment to actively contribute to this transformation by connecting people, projects, and businesses to a greener and more responsible future.
Read the full document on the sanction: Law No. 15,042
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