As the United Nations Climate Change Conference 2022 (COP27), to be held in November in Egypt, draws near, countries worldwide are beginning to put forward ideas to minimize negative environmental impacts.
One of the most evident themes in this context is the institution of a regulated carbon market. Brazil has also started to take steps towards this goal.
One example is the federal government’s Decree No. 11,075/2022, which came into force in May this year. The measure created the Brazilian Regulated Carbon Market. The decree focuses on the export of credits, mainly to countries and companies that need to offset emissions to meet carbon neutrality commitments.
The norm also foresees procedures for elaborating Sectorial Plans for the Mitigation of Climate Change and the National System for the Reduction of Greenhouse Gas Emissions (Sinare).
The sustainable development and environment specialist, Miriam Lia, says that the institution of a regulated carbon market is fundamental, but it should be seen as one of the tools used by governments in climate strategies.
“When a price is allocated for the emission of greenhouse gases, the main benefit is the financial incentive to reduce emissions. When that cost is internalized, it creates an incentive for companies to reduce emissions or increase emission removals. So, incorporating this cost in the company’s economic decision-making is very beneficial,” she considers.
The National Congress also seeks an answer to this demand by analyzing bill 528/2021. The proposal establishes the Brazilian Emissions Reduction Market (MBRE), which aims to regulate the buying and selling of carbon credits in Brazil.
In the assessment of the director for Public Policy and Governmental Relations at TNC Brazil, Karen Oliveira, the regulated carbon market is one of the mechanisms that encourage the maintenance of forests.
For this reason, she believes that measures contributing to the appreciation of the environment must be approved and put into practice.
“Actions that, economically, make the standing forest have its value recognized, as is the case of the regulated carbon market, tend to be an incentive for the reduction of deforestation and, consequently, for the reduction of forest fires,” she points out.
ORIGIN OF THE CARBON MARKET
The carbon markets have gained more emphasis worldwide since UN member countries signed the Kyoto Protocol in 1997. The agreement between nations established the goal that developed countries should reduce their greenhouse gas emissions by 5.2%. The reduction should occur by 2012.
In 2015, with the signing of the Paris Agreement, the targets were renewed and started to count on incentives for private initiatives. The regulation of these points occurred at COP26 in Glasgow, Scotland.
The carbon credit market refers to the system of carbon emission offsets. It is done through the acquisition of carbon credits by companies that have not met their greenhouse gas (GHG) reduction targets from those that have reduced their emissions.
One of the strategies to exercise the carbon market is through “command and control” policies. In this case, the State establishes direct regulation.
Another possibility is through economic instruments, by adopting incentives and subsidies through carbon pricing. This model consists of assigning a price to greenhouse gas emissions.
With information from Brasil61