Carbon credits and the new law

1. Introduction

You carbon credits and environmental compensation have been gaining prominence as essential mechanisms in the fight against climate change. These instruments allow to quantify, reduce or neutralize greenhouse gas emissions and are being regulated more clearly in Brazil with the She 15.042/2024. At the same time, The alert is growing on the greenwashing, the practice of presenting a false image of sustainability. In this article, We analyze how these fronts connect and what to expect from the new Brazilian carbon market.

2. What are carbon credits and environmental compensation

Carbon credits are certificates that correspond to 1 ton of co₂ equivalent (tCO₂e) that was avoided, reduced or removed from the atmosphere. They are generated from projects such as reforestation, conservation of forests (How Redd+), renewable energies, and energy efficiency.

A Environmental compensation occurs when companies or individuals neutralize their emissions acquiring these credits from certified projects. In the voluntary market, Compensation occurs at its own initiative; Already in the regulated market, it is mandatory for companies that exceed certain emissions levels.

3. She 15.042/2024 e o sbce: The regulated carbon market in Brazil

A She 15.042/2024, sanctioned in 11 december 2024 and published in 12 from December, instituted the Brazilian Emissions Trade System (SBCE) as a regulated carbon market in the country.

3.1 Main provisions of the law

• REPORT AND CONTROL: Companies that issue above 10 mil tCO₂and/year must report their emissions. Who surpasses 25 mil tCO₂and/year must present annual plans and reports with reduction or removal strategies.
• Allowed assets in the system:
  • CBES - Brazilian Emissions Quotas, allocated by the government as permissions to issue to a certain ceiling;
  • CRVEs - Verified emission reduction or removal certificates, generated by projects with accredited methodology and registration with SBCE.
• Negotiation code: Assets are considered securities, subject to regulation of Securities Commission (CVM), including when negotiated outside the financial market.
• Governance: SBCE will be supervised by a Interministerial Climate Change Committee (CIM), one managing organ and one Advisory Technical Committee, responsible for the implementation and supervision of the system.
• Implementation phases: The schedule provides for five progressive phases, from the initial regulation to the full operation of the market, with national quota allocation plans and price stabilization mechanisms.

4. Impacts and Challenges

4.1 Expected benefits

• Legal predictability and market structuring: The law provides clear rules and security to private agents, attracting national and international investments and inserting Brazil into the overall regulated carbon market.
• Generation of recipes and green GDP: Studies show that the Brazilian carbon market can move until US $ 100bills up to 2030, and potentially $ 300billions up to 2050. This dynamic is seen as an instrument of sustainable development, technological innovation and valorization of environmental assets.
• Social and territorial inclusion: The law guarantees traditional communities and indigenous peoples public law of commercialization and financial participation in projects carried out in their territories - with until 70% of credits intended for these populations in REDD+ projects, in addition to indemnities for damages.

4.2 Structural challenges

• Pending technical regulation: Definitions on sectoral limits are lacking, Certification Methods, interoperability with voluntary and international markets - all objects of regulatory acts in the next two years.
• Governance and inspection: The integrity of the system depends on transparency in the emission, Credit registration and negotiation. Failures in this process can generate distortions and undermine SBCE's credibility.
• Social and labor risks: Work cases in conditions analogous to slavery in carbon projects show voluntary market weaknesses and the need for rigorous supervision, even in the regulated sector.
• Early sales and legal disputes: In Pará, The attempted early sales of environmental project credits generated judicial recommendation for annulment for violating the law 15.042, especially with regard to the nature of assets as securities.

5. Greenwashing: The Hidden Risk

Greenwashing refers to the marketing strategy that presents an image of environmental responsibility without backing real. Companies can disclose compensations through carbon credits without proper verification or effectiveness, Creating an illusion of sustainability. Although the law does not explicitly mention the term, Several excerpts warn of weaknesses that can facilitate Greenwashing practices:

1. Lack of integrity in certification: Without robust methodologies or reliable audits, Credits may not represent real gee reductions.
2. Abusive use of the voluntary market: Unregulated projects can be explored for corporate image purposes, even without real impact of mitigation.
3. Absence of transparency: Lack of traceability, Opaque disclosure of contracts and results and absence of effective penalties can allow marks to use compensations such as Green Facade.

To her 15.042/2024 highlights the need for governance, control, monitoring and interoperability between voluntary and regulated markets to prevent credits from becoming merely symbolic instruments.

6. Future Panorama and Recommendations

• Monitor regulatory decrees: We close two years The Government should define the National Allocation Plan and detailed rules of SBCE. The evolution of these norms will be crucial to the success or failure of the system.
• Require strict audit and certification criteria: Projects that generate crves need to be based on validated methodologies and accompanied by independent audits to ensure environmental and social integrity.
• Engage traditional communities in a participatory way: Ensure previous consultation, Benefit distribution, adequate compensation and autonomy is essential for legitimacy and socio -environmental justice.
• Promote transparency and accountability: Companies must clearly disclose their carbon footprint, purchase of credits, Origin of Concrete Projects and Results, Avoiding ambiguities that favor Greenwashing.
• Foster international interoperability: Integrating SBCE with the global carbon market gives credibility and possibility of valuing Brazilian credits, But it requires compatible standards and international acceptance.

7. FINAL CONSIDERATIONS

To her 15.042/2024 represents a decisive step towards the structuring of a carbon market regulated in Brazil, with potential to generate environmental impact, positive social and economic. Carbon credits, When well implemented, are powerful instruments of environmental compensation and stimulus the energy transition and land use. Nonetheless, The success of the new regulatory environment will depend on the faithful implementation of good practices, transparent governance, Social Inspection and Greenwashing's Fighting. Only then will it be possible to create a carbon market that evaluates real impacts and actually contribute to the climatic commitments of the country and the planet.

Learn more about the carbon market in our Blog.