Friday, 18 October 2024.
Yesterday we commented on the panel “Climate change mitigation and Nature-Based Solutions: what does science say?” which took place on the first day of the Brazilian Climate and Carbon Conference 2024 #CBCC organized by Aliança Brasil Nature-based Solutions in São Paulo, Brazil.
Without forgetting yesterday's spoiler alert, about the announcement at the closing of the event that will be highlighted at the end of this article, today we will comment on the panel “Corresponding adjustments within Article 6 of the Paris Agreement: a look at Brazil”, moderated by Pedro Venzon, International Policy Advisor at IETA.
Marcelo Theoto Rocha, consultant in climate governance and carbon markets commented on the progress of discussions around Article 6, before COP-29. In short, “article 6.2 is going well, article 6.4, the issue relating to documentation may still cause noise in Baku”. At the end, he warned about the increase in decarbonization costs as times passes for Brazilian companies.
As director of ACX Brasil, and always pragmatic on behalf of the private sector, Carlos Martins brought numbers and perspectives regarding reasonableness: export volumes of ITMOs (Internationally Transferred Mitigation Outcome) by Brazil, emissions from the cerrado region, capital flows, issues of leadership and interests between countries and a point about the “sovereignty” of the additionality issue.
Regarding the legal nature of carbon credits - one of Carbon Credit Markets' favorite topics - we had the participation of Ludovino Lopes, member of the UNIDROIT Working Group, whose speech topics are listed below:
CDM, regulated by the United Nations, was once the 11th item in the balance of Brazilian exports, with Brazil being the 3rd largest seller of CDM credits after China and India
Today the topic of carbon credits is more “spread” among countries, especially due to the need to adapt national legislation to the international framework and internalize legal structures
Between 2004 and 2024, emissions covered by the regulated market in the world went from 7% to 25%, comprising ETS (Cap and Trade) and Tax Carbon Market Systems
Article 6 of the Paris Agreement is fundamental in the developments and implications of the future applications of articles 6.2 (ITMOs) and 6.4 (ERs). “It is important not to forget Article 6.8” highlighted Ludovino, referring to the fact that countries can finance non-market approaches instead of negotiating credits through “payment for results and performance”.
Brazil ratified the Paris Agreement, and as a consequence it is internal law. Failure to comply with the Agreement may raise the risk of public civil actions and other questions from civil society and international impacts in the future.
Regarding the NDCs, Nationally Determined Contributions, he highlighted the fact that the Brazilian one is economy-wide, that is, it includes all sectors of economic activity in the country.
Our NDC is also unconditional, so it will be essential that we define the limits of unconditionality and assess whether there is space to define non-conditional sectors that require financial resources and/or technology.
In the case of the voluntary market, it is important to harmonize the legal nature so that they can have legal interoperability with regulated market credits and international carbon market systems.
Voluntary credits are today defined as a civil asset in the Bill in the National Congress, which according to Ludovino “could be problematic”, for not applying to the legal nature of sectors of activities that can generate credits and for this reason they may not qualify.
In other words, Brazil needs to address the interoperability of all these: payments for environmental services, voluntary carbon credits and regulated credits.
And define the path towards ITMOs and NDCs, as the competition for this new asset, carbon credits, “is no longer between projects and companies and is becoming between countries”.
According to Ludovino, a fantastic professional with whom we were able to talk more after the event, for Brazil the “road will be very difficult, but possible”, including in an upcoming scenario similar to the “eye of a hurricane”: CBAM, CORSIA, deforestation laws, NDCs and Article 6.
Referring to facts about the beginnings of the CDM in Brazil, Carbon Credit Markets selected these vintage articles (in Portuguese) for you to recall:
Crédito de Carbono - MDL, by the BiodieselBR portal, January 29, 2006
Ingleses ampliam negócio de crédito de carbono no Brasil, by IBRAM, March 30, 2007
We also briefly highlight the panel “The role of carbon credits in the transformation of territories”, whose testimonies from Almir Narayamoga Suruí - indigenous leader of the Paiter Suruí people - and Maria Adão - from the Association of Residents of the Remanent Community of Quilombo de Cachoeira Porteira - were remarkable, both regarding the historical - and land - challenges but also due to the optimism and perspective of a better and sustainable future that carbon credits came to represent for those social groups in the Amazon region.
And before closing the event, Janaina Dallan brought one more news (the 1st one is in yesterday's post!):
Aliança Brasil NBC and APEX Brasil will start working together on the international promotion of Brazilian carbon credits. APEX Brasil, the Brazilian Export and Investment Promotion Agency, is the trade promotion organization and investment promotion agency for various sectors of the Brazilian economy.
