On November 13, Brazil’s Senate approved a bill to regulate the country’s carbon market, advancing it to the Lower House for further review, Valor International reported on Thursday.
The government is pushing for enactment of the bill before COP29 concludes on November 22 in Baku, Azerbaijan.
However, the legislation faces contention between the Senate and the Lower House, with the latter asserting authorship and final authority over its provisions.
The proposed framework establishes rules for mandatory and voluntary carbon markets.
Companies emitting over 10,000 tons of greenhouse gases annually, including cement and oil producers, must participate in the mandatory market.
Under the bill, polluters are required to offset excess emissions by purchasing carbon credits, with penalties for non-compliance, such as fines of up to 3% of gross revenue.
Other penalties include cancelation of credit trading registration, potential loss of credit facilities or tax benefits, and exclusion from government contracts for up to three years.
Polluting companies can also utilize carbon capture to meet emission caps.
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In the voluntary market, the bill permits the sale of carbon assets, with credit values determined by specific projects, including those involving the maintenance and restoration of areas protected under the Forest Code.
Agribusiness activities, including agriculture and livestock farming, are excluded from mandatory regulations but may sell credits if they demonstrate carbon dioxide (CO2) capture.
A notable amendment includes the sanitation sector in the regulatory framework.
Additionally, 75% of revenues from Brazil’s carbon market will go to the National Climate Change Fund, with 5% designated for Indigenous and traditional communities contributing to forest conservation.
Landowners will receive a portion of credits under state programs, while insurers are no longer mandated to invest a minimum percentage of their technical reserves and provisions in environmental assets.
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