The 26th United Nations Conference on Climate Change, COP26, reignited discussions on the carbon market, a subject encouraged in Brazil by the urgent processing in the Chamber of Deputies of Bill 528/21, which provides for the regulation of the so-called MBRE (Brazilian Emissions Reduction Market).
Carbon credits consist of quantified reductions in GHG (Greenhouse Gas) emissions, which are certified according to technical standards and criteria. In this market, these records are converted into securities and negotiated with interested agents.
A great example of a solution to the climate issue through carbon credits is the CDM (Clean Development Mechanism) and the CIE (Emissions Trading), defined by the Kyoto Protocol (1997).
In the CDM, actors from developing countries can submit emission reduction projects, which generate CERs (Certified Emissions Reductions). These can be traded, for example, with developed countries that, based on these titles, negotiate compensation at the CIE to maintain the goals of the treaty.
What is envisaged with such measures is the institutionalization of a global market for carbon credits, in which emission reduction initiatives, encouraged by a commercial interest involved, offset surpluses, generating a balance or even a reduction in GHG. Furthermore, there is an expectation of consequent generation of business opportunities, jobs and income.
The market solution is criticized by environmentalists, under the fundamental argument that the possibilities of compensation would only generate the legitimization of excessive emissions from developed countries, which have historical difficulty in reducing volumes.
Given the energy potential and the natural possibilities for carrying out emission reduction projects, Brazil has shown itself to be highly interested in the development of this market.
Article 6 of the Paris Agreement, held in 2015 at COP21, promoted a new determining factor in the matter, providing for the possibility of signatory parties opting for cooperation on a voluntary basis for the implementation of nationally determined contributions, expressly speaking of the possibility of “using of internationally transferred mitigation results for the purpose of meeting nationally determined contributions”.
However, the scope of the provision ended up requiring a regulation of the terms, which was postponed until future negotiations.
At COP26, some important controversies regarding the issue were addressed, which determined the creation of the global carbon market and unraveled some of the pre-existing gaps left by the Paris Agreement, such as the limit on previous certifications – issued between 2013 and 2020 – that could be used.
In Brazil, the MBRE (Brazilian Emissions Reduction Market) is provided for in art. 9th of Law No. 12.187/09, still lacking regulation. We know the importance of better legal determinations on the operation to ensure greater security for agents, encouraging market adherence. This is the main justification for PL 528/21.
In order to structure negotiations in this market, PL 528/21 seeks to conceptualize and determine the legal nature of carbon credits, establish the accounting regime under the terms of the Paris Agreement, determine the fungibility of carbon assets, among other topics.
In the current text of the project, carbon credits are defined as “rights to an intangible, intangible, tradable, fungible asset representing the reduction or removal of a ton of carbon equivalent”.
The SNRI-GEE (National Greenhouse Gas Emissions Inventory Registration System) was also created, based on the MBRE, which would only recognize and account for carbon credits and transactions registered therein.
The structuring of the global carbon market and the MBRE tends to favor the development of negotiations by supposedly providing more security to agents, although the effects of the market approach to environmental issues are relatively unpredictable both in relation to financial bias and in terms of real effects on a balance and reduction of emissions.
