Brazilian president announces carbon market, weak on details

RIO DE JANEIRO (AFP) – Brazil’s far-right President Jair Bolsonaro has signed a decree that he says will create a national carbon market to curb greenhouse gas emissions. Brazil ranks sixth in the world in terms of climate pollution, according to Climate Watch.

“In this new market for the green economy, Brazil stands out as a powerful force,” Bolsonaro told a business crowd during the government-sponsored Global Carbon Market Conference Thursday night in Rio de Janeiro that was broadcast online but closed to the press.

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

Bolsonaro’s decree states that unnamed economic sectors can record their carbon footprint in a new registry and then advance the emissions reduction curve within 180 days. This deadline can be extended for another 180 days.

“The procedure is ineffective. It is setting up a registration system but it is failing to set deadlines,” said Gustavo Pinheiro, a member of the advisory board of the Glasgow Financial Alliance for Net Zero. “It is a voluntary regulation, because it does not result in any commitment.”

Bolsonaro’s announcement also avoids a different carbon market proposal backed by some Brazilian industries that have been making their way through Congress.

In the actual commercial market system, governments determine the maximum amount of pollution that companies can release. Companies that beat their target generate credit that they can sell. Companies that fail to achieve their goals have to pay money to buy credits or provisions. In the voluntary market, companies agree to reduce their pollution without having to buy credits and commit to buying them if they fail.

Nearly half of Brazil’s climate pollution comes from deforestation, according to an annual study from the nonprofit Brazil Climate Observatory Network. The devastation is so massive that the eastern Amazon is no longer a carbon sink or sink for Earth, and has turned into a carbon source, according to a study published in 2021 in the journal Nature.

Bolsonaro’s announcement was met with skepticism among participants at the Global Carbon Market Conference.

“If the high-profile issue of deforestation is not dealt with effectively, it will be difficult for Brazil to attract investment into the carbon market,” said Graham Stock, strategist at BlueBay Asset Management.

“We believe that Brazil must re-deforestation in order to have any chance of meeting its broader commitments under the Paris Agreement,” he said. At the United Nations climate conference in Glasgow last year, Brazil made further pledges to eradicate deforestation. “But that’s not happening,” he said.

Brazil has committed to the world reducing carbon dioxide pollution by 43% from 2005 levels by 2030. Instead, Brazil’s greenhouse gas emissions in 2020 increased by 9.5%, while worldwide they decreased by nearly 7%, according to the Climate Observatory . Meanwhile, deforestation in the Amazon rose 22% last year, according to official monitoring. Stock pointed out that the prosecution of environmental crimes It is also declining, a fact that the Bolsonaro administration has celebrated as an achievement.

Stock is also the co-chair of the Investor Policy Dialogue on Deforestation, a group that works with authorities in Brazil and Indonesia to stop deforestation. It claims to have in its membership 58 financial institutions from 18 countries, with approximately $8.5 trillion in assets under management.

In the actual voluntary carbon market, verification is critical. Companies wishing to obtain carbon credits must employ independent third-party investigators who certify that had it not been for the creation of the credit, carbon pollution could have been released. The credit for this is a solemn promise to avoid pollution. Otherwise the credits are bogus and do nothing to tackle climate change.

“This is a real test for us,” said Roberto Campos Neto, president of Brazil’s central bank, seated next to Stoke. “We can think we’re doing a good job, but if investors’ perception is not in line with what’s needed for investments to arrive, we’ll have failed.”

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