Brazil's president signs emissions trading bill into law
Quantum Commodity Intelligence - Brazil's president has signed into law the country's emissions trading system (ETS) bill, officially establishing what will be one of the world's largest regulated carbon markets.
The official act by Luiz Inácio Lula da Silva was published today in the Federal Union Gazette, effectively meaning the South American nation is now ready to move into the implementation of its Brazilian Greenhouse Gas Emissions Trading System (SBCE).
"The law is finally here and the time to invest is now," said Natalia Renteria, a Brazilian lawyer specialising in climate change policy and regulation.
The ETS bill was approved by the National Congress on November 19 following more than a year of stalled negotiations, with an implementation period now set to kick off and last until 2030, when the SBCE should be fully operational.
The compliance carbon market will cover companies that emit more than 25,000 tonnes of CO2 equivalent year (tCO2e/y) a, as well as requiring emitters of more than 10,000 tCO2e/y to submit annual reports detailing their emissions.
Emitters will compensate for their emissions using Certificates of Verified Emission Reduction or Removal (CRVE), which can be issued by the conversion of carbon credits issued under standards and methodologies approved under the SBCE.
The law allows for CRVEs to be traded over financial markets as long as the parties involved observe financial regulations established by the Brazilian Securities Exchanges Commission.
"Investors that join earlier the market, that get ahead at building bridges and making contacts in the country, those are the ones set to profit the most once the system is ready," said Renteria.
The ETS law connects voluntary and regulated carbon markets by creating common rules for both, such as methodologies, providing for the sale of carbon credits into the SBCE, she said.
It also integrates carbon credits into financial capital markets by turning the offsets into securities, providing security for investors, "which will bring necessary finance to scale up the market", she added.
