Brazil’s president announces carbon market, but few details

RIO DE JANEIRO (AP) — Brazil’s far-right President Jair Bolsonaro signed a decree that he said would create a national carbon market to reduce greenhouse gas emissions.Brazil ranks sixth in the world for climate pollution Climate Watch.

“Brazil is emerging as a powerhouse in this new green economy market,” Bolsonaro told a group of businessmen Thursday night at the government-sponsored global carbon market conference in Rio de Janeiro, which was webcast, but Not open to the media.

But critics say the measure is too vague and fails to address Brazil’s biggest climate problem – explosive deforestation in the Amazon rainforest.

Bolsonaro’s decree allows unnamed sectors of the economy to register their carbon footprints in a new registry, which then presents emission reduction curves within 180 days. This deadline can be extended for a further 180 days.

“The measure was ineffective. It created a registration system but failed to set a deadline,” said Gustavo Pinheiro, a member of the Glasgow Net Zero Financial Alliance advisory board. “It’s a voluntary provision because it creates no obligations.”

Bolsonaro’s statement also sidesteps a different carbon market proposal that has the backing of some of Brazil’s industries that have been passing Congress.

In the actual cap-and-trade market system, the government sets the maximum amount of pollution that enterprises can emit. Companies that exceed targets generate credits that can be sold. Companies that fail to meet their targets must spend money on credits or allowances. In a voluntary market, companies agree to reduce pollution rather than be forced, and promise to buy credits if they fail.

Almost half of Brazil’s climate pollution comes from deforestation, according to an annual study by the Brazilian nonprofit Network Climate Observatory. The damage is so great that the eastern Amazon is no longer a carbon sink or sink for the planet, but a source of carbon. Research published in the journal Nature in 2021.

Bolsonaro’s statement was questioned by attendees at the Global Carbon Market Conference.

“If the high-profile issue of deforestation is not effectively addressed,” said Graham Stoker, a strategist at BlueBay Asset Management, “Brazil will struggle to attract investment in the carbon market.”

“We believe Brazil must reduce deforestation to have a chance to meet its broader commitments under the Paris Agreement,” he said. Brazil made a further pledge to end deforestation at last year’s UN climate conference in Glasgow. “But that didn’t happen,” he said.

Brazil has pledged to the world to reduce its carbon dioxide pollution by 43 percent from 2005 levels by 2030. In contrast, Brazil’s greenhouse gas emissions rose by 9.5 percent in 2020, while globally they fell by nearly 7 percent, according to the Climate Observatory. Meanwhile, deforestation in the Amazon increased by 22 percent last year, according to official monitoring.Stock points out that the prosecution of environmental crimes is also in decline, a fact hailed as an achievement by the Bolsonaro government.

Stock is also co-chair of The Investors Policy Dialogue on Deforestation, which has been working with authorities in Brazil and Indonesia to stop deforestation. It claims to have members from 58 financial institutions in 18 countries and manage about $8.5 trillion in assets.

In actual voluntary carbon markets, verification is critical. Companies wishing to generate carbon credits must hire independent third-party verifiers to prove that carbon pollution would be released without the creation of credits. Credit is a solemn promise that pollution has been avoided. Otherwise, these credits are bogus and do nothing to address climate change.

“It’s a reality check for us,” said Roberto Camposnetto, president of Brazil’s central bank, sitting next to Stoke. “We can think we’re doing well, but if investors’ perceptions don’t match what it takes for an investment to arrive, then we’re failing.”