Carbon market could yield US$ 100 billion to Brazil


A report by the International Chamber of Commerce (ICC Brasil), released at the end of September, revealed the potential that Brazil has to generate US$ 100 billion in revenue from the sale of carbon credits by 2030. Of this total, more than 60% could be come from the forestry sector, which has greater potential for reducing emissions, lower costs and easier implementation of sustainable forest management and reforestation, solutions based on nature.

In the next decade, Brazil has the potential to supply 5% to 37% of global demand in the voluntary market and 2% to 22% of global demand in the regulated carbon market, to be created under the Paris Agreement. The assessment also includes agriculture, as it presents favorable conditions in terms of cost-effectiveness, and the energy sector, as it contains technological innovations to be explored.

Projections that point to revenue of US$ 100 billion consider an optimistic scenario, in which Brazil appears with a 10% share in the global carbon credit market, with a price per ton of CO2 equivalent to US$ 100.

Differentials of the forest sector

The study had a partnership with WayCarbon, a leading consultancy in environmental asset management, and support from Suzano and other large companies involved in the low-carbon economy.

The history of successful implementation and generation of forest credits, the technical capacity of the private sector and the country’s history of participation in the voluntary market served as the basis for the study.

“We look at the conservative and real number of credits issued. In this way, we see that this number today could be higher, and that the future number could also be higher”, explained Laura Albuquerque, sustainable finance manager at WayCarbon, during the 4th Meeting ‘O Brasil Quer Mais’, held at the end of September.

The forestry sector stands out with a credit generation potential of up to 660 million tons of equivalent CO2, which corresponds to more than 60% of the projected market. The data take into account the estimates of abatement of emissions from reforestation and avoided deforestation, the potential of forest plantation areas by private entities, the storage capacity of conservation areas for native vegetation and carbon sequestration in the mangroves.

“The whole world is looking for carbon capture solutions and technological solutions to compress CO2. We have a very simple and available solution which is photosynthesis. There is no easier and more efficient mechanism to remove CO2 from the atmosphere than letting a forest grow”, said Julio Natalense, Executive Manager of Initiatives and Carbon at Suzano.

Socioeconomic benefits

Laura Albuquerque, from WayCarbon, emphasized benefits that go beyond the reduction of greenhouse gases, such as socioeconomic development, job creation and new investments and social and environmental benefits.

“All carbon credits that can be sold by Brazil in the forest sector will come loaded with benefits of preserving biodiversity, improving water quality and availability, preserving the forest and maintaining hydrological cycles,” she said.

The report also presents the barriers that the carbon market imposes to reach the presented revenues. Among them is the market barrier, represented by the high cost related to the carbon credit certification process, and political barriers, such as regulatory impasses.

Finally, the study makes recommendations to the public and private sectors. The Brazilian government is recommended to defend at COP26 the inclusion of the agricultural, forestry and energy sectors in the types of projects eligible in article 6, and to establish institutional measures that enable the operation of markets, such as the regulation of the Brazilian market with the approval of PL 528/21.

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