But critics say the measure is too vague and has failed to address Brazil’s biggest climate problem – explosive deforestation in the Amazon rainforest.
The Bolsonaro decree states that unnamed economic sectors can register their carbon footprint in a new registry and then present an emission reduction curve within 180 days. This period can be extended for another 180 days.
“Measurements are invalid. It establishes a registry system but fails to set a deadline, “said Gustavo Pinheiro, a member of the advisory board of the Glasgow Financial Alliance for Net Zero.
Balsonaro’s announcement also sidestepped a proposal for a different carbon market, backed by some Brazilian industries, paving the way for Congress.
In a real cap and trade market system, governments set the maximum amount of pollution that companies can give up. Companies that exceed their target generate credit so they can sell. Companies that fail to achieve their goals will have to pay to buy credit or allowances. In a voluntary market, companies agree to reduce their pollution without being compelled and promise to buy credit if they fail.
According to an annual survey by the Climate Observatory, a non-profit network in Brazil, about half of Brazil’s climate pollution comes from deforestation. The devastation is so widespread that the eastern Amazon has ceased to be a carbon sink or absorber for the Earth and has been converted to a source of carbon, according to a 2021 study published in the journal Nature.
Balsonaro’s announcement met with skepticism among participants at the Global Carbon Market Congress.
“If the high-profile problem of deforestation is not addressed effectively, it will be difficult for Brazil to attract investment in the carbon market,” said Graham Stock, a BlueB asset management strategist.
“We believe that Brazil needs to bring back deforestation in order to have the opportunity to fulfill its larger commitments under the Paris Agreement,” he said. At the UN Climate Conference in Glasgow last year, Brazil made further commitments to eradicate deforestation. “But it’s not happening,” he said.
By 2030, Brazil is committed to reducing its carbon dioxide emissions by 43% from 2005 levels. Instead, in 2020, Brazil’s greenhouse gas emissions increased by 9.5%, while worldwide, they decreased by about 7%, according to the Climate Observatory. Meanwhile, deforestation in the Amazon has increased by 22% in the last year, according to official observations. Stock noted that environmental crime trials are also declining, which is celebrated as an achievement of the Bolsonaro administration.
Vice President of Stock the Investor Policy Dialogue on Forests, a group involved with the authorities in Brazil and Indonesia to stop deforestation. It claims membership in 58 financial institutions in 18 countries, with approximately .5 8.5 trillion in assets under management.
In a truly voluntary carbon market, verification is crucial. Companies that want to create carbon credits must hire independent third-party verifiers who prove it, but for creating credits, carbon pollution will be released. Achievement is a glorious promise that pollution has been avoided. Otherwise the credits are counterfeit and do nothing to tackle climate change.
“Here’s a reality check for us,” said Roberto Campos Neto, president of Brazil’s central bank, sitting next to the stock. “We may think we are doing well, but if investors’ ideas are not in line with what is required for investment, we will fail.”