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Brazil's carbon market rulemaking could pick up

  • Market: Emissions
  • 20/06/25

Regulations required to put Brazil's regulated carbon emissions market into force have advanced slowly since congress passed legislation in late 2024, but this year may speed several key pieces.

The government plans to gradually implement the market by 2030, even as it prepares to host the Cop 30 climate summit in Belem, Para state in the heart of the Brazilian Amazon in November.

So far this year, the working group responsible for issuing the regulations that will govern the new market has met 20 times. Participants in the working group include representatives from 10 government ministries, but the finance ministry is spearheading regulations. A first round should be ready by July, the ministry said this week.

The working group could define several elements in coming weeks, including clarity regarding the creation of the new agency that will oversee this market. The law stipulates that this new entity have its own technical staff and be independent from the government.

"We urgently need to know who is going to be in charge of this market," Guilherme Lefevre, the director of the Getulio Vargas Foundation's sustainability center said, adding that the market needs to have a strong regulator to have credibility.

For the market to move forward, Brazil also needs to create a national system for monitoring, reporting, and verification of greenhouse gas emissions. "Brazil still does not have this system, which is fundamental for the development of the regulated carbon market," Lefevre said.

This system will underpin the national emissions allocation plan, which will grant companies emission quotas, which can be traded. The law requires companies that emit over 10,000 metric tonnes (t) of CO2 equivalent (tCO2e/yr) to report their emissions and companies with over 25,0000 tCO2e/yr in emissions to participate in the cap-and-trade system that will go into effect when the new carbon market begins operating completely in 2030.

"So far, roughly 600 companies have reported their emissions and a total of around 5,000 companies will need to do so to comply with the market requirements," Laura Albuquerque, chief climate officer at Future Climate consultancy said. She added that that while companies in some sectors, such as steel and pulp and paper are already more prepared for the market, others are behind and are working to understand the extent to which the new market represents a risk or an opportunity.

The government is also in a race against time to show progress towards creating the new market ahead of the November Cop 30 meeting, when it plans to launch an initiative that will integrate the Brazilian carbon market with markets in the EU, China and California. The goal is to use this coalition of carbons markets as a test case for a future, global carbon market.

Not a silver bullet

While the creation of a regulated carbon market is an important element of Brazil's decarbonization efforts, it is only part of the plan to meet its emissions-reduction targets.

Compared with other countries, industry represents a small share of total emissions. In 2023 — the most recent year with available data — non-agricultural industry only accounted for just 4pc of Brazil's total emissions.

Still, because the law permits companies on the regulated market to purchase a share of their credits from the voluntary market, tropical forest protection and restoration projects will also benefit.

With Cop 30 leadership pushing for the next gathering to put into effect what has been agreed at previous summits, Brazil will likely feel pressure to advance more quickly on his own initiatives.

Brazil's CO2 equivalent emissions by sector, 2023 mn t

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09/07/25

Australian liquid fuels policy to free up ACCUs: CEFC

Australian liquid fuels policy to free up ACCUs: CEFC

Sydney, 9 July (Argus) — Annual demand for Australian Carbon Credit Units (ACCUs) could be reduced by as much as 7.5mn t of carbon dioxide equivalent (CO2e) by 2050 if Australia adopted policy changes to develop a low-carbon liquid fuels (LCLF) industry, according to a report this week. Encouraging companies to reduce direct scope 1 emissions through changes to the federal safeguard mechanism and/or voluntary adoption would drive the development of an Australian LCLF market and free up ACCUs for use in sectors that cannot achieve on-site decarbonisation due to technical challenges, state-owned green investment fund Clean Energy Finance (CEFC) said in a report authored by consultancy Deloitte . Under its central case scenario, which would involve constraining the use of carbon offsets, CEFC said that a 7bn litres/yr LCLF market could be created by 2050, abating up to 12mn t CO2e in 2040 and 20mn t CO2e in 2050 as a result. Annual ACCU demand across six sectors covered by the report — mining, aviation, rail, heavy freight, maritime, and construction — could be reduced by around 6.8mn t CO2e by 2050 in that case, to 2.4mn t CO2e/yr. Demand for ACCUs could reach as low as 1.7mn t CO2e by 2050 under an accelerated scenario, which would involve EU-style mandates for LCLF. Demand for ACCUs would be around 9.2mn t CO2e/yr under the base scenario, which assumes a market-led transition in which carbon prices remain low and LCLF demand is driven by a small group of customers willing to pay significant premiums to reduce their scope 3 emissions. 30pc cap under the safeguard mechanism The central case scenario assumes a hypothetical government intervention to cap the use of ACCUs under the safeguard mechanism at 30pc of the baseline for liquid fuel-related emissions. Currently, there is no limit to the number of ACCUs or safeguard mechanism credits (SMCs) that facilities can use to manage their excess emissions under the scheme, but those that surrender carbon units equivalent to 30pc or more of their baselines need to publish a statement explaining why they have not undertaken more on-site abatement activities . The central case scenario also assumes the removal of baseline adjustments for trade-exposed baseline-adjusted facilities . Adopting a minimum 70pc direct on-site decarbonisation would trigger a positive supply-side response, driving significant technology deployment and competition between pathways and feedstocks, the CEFC said. Stakeholders claim that the current safeguard mechanism and ACCU pricing are not enough to drive early LCLF uptake, the report said. Policy intervention is needed to accelerate the bridging of the cost gap between the LCLF production cost and the ACCU price, which is currently not expected to happen until the 2040s, the report said. A market-led transition, on the other hand, would lead to greater pressure on the ACCU market, with up to 7.35mn t CO2e of ACCUs needed to meet demand in 2035 and 15.5mn t CO2e in 2050. ACCU supply reached an all-time high of 18.78mn in 2024 and is forecast at 19mn-24mn for 2025 . But the industry needs to boost future issuances to address an expected shift in the supply-demand balance within a few years . By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Paving Amazon road may spoil Brazil climate target


08/07/25
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08/07/25

Paving Amazon road may spoil Brazil climate target

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EU Parliament disputes 2040 climate file


08/07/25
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08/07/25

EU Parliament disputes 2040 climate file

Brussels, 8 July (Argus) — The European parliament will vote tomorrow on whether or not to use an urgency procedure in examining the legal proposals to set a 2040 climate target for the bloc. The discussions overshadowed EU climate commissioner Wopke Hoekstra's presentation of the proposal. "The Left, Renew and Green activists are trying to manipulate the process and seize control," said Anders Vistisen, a Danish member of the far-right Patriots for Europe group. The group has been given the task of leading the work on amending the bloc's climate law to set an EU-wide 2040 target. The commission's proposal involves a goal of reducing EU emissions by 90pc by 2040 from 1990 levels. The urgency procedure would give greater powers in discussing the 2040 proposals to the chair of parliament's environment committee, Antonio Decaro, an Italian MEP from the centre-left S&D group. The S&D put forward the urgency procedure together with the Greens and Left. Parliament's largest centre-right EPP group did not sign. "They'll probably need some EPP members," an official said. The Patriots group includes parties such as Hungary's Fidesz, France's Rassemblement National, Italy's Lega Nord and Spain's Vox. Vistisen said the Patriots group completely rejects the "unrealistic and ideological" commission approach. "The commission wants to push through a 90pc reduction. We're making it clear — that's not going to happen." Former environment committee chair Pascal Canfin now expects greater co-operation between "pro-European" groups. "It will force the pro-European groups to work together to carry this key proposal to an agreement before the [UN climate conference] Cop 30 in Belem," said Canfin, a French liberal. The dispute overshadowed Hoekstra's presentation of the 2040 proposals to parliament. "What we do need, particularly for these type of policies, are solid majorities. And yes, sometimes that takes more time than you anticipate beforehand," Hoekstra said. Speaking for the EPP, Lidia Pereira called for flexibility and warned against de-industrialisation. "More important than setting a numerical target is making sure we stay on the right course," Pereira said. The commission's proposal includes several possible "flexibilities" for the target, including allowing a "limited" contribution of international carbon credits issued under Article 6 of the Paris climate agreement to count towards the goal from 2036, and the use of domestic permanent carbon removals in the EU emissions trading system. "The proposals for flexibility are just green colonialism. It will help rich countries such as the Netherlands or Germany, large multinational corporations and poor countries and small companies will pay," said Alexandr Vondra, Czech member of the conservative ECR group. German S&D member Tiemo Wolken criticised the commission for coming forward with a 2040 proposal "weeks" before international climate talks in Belem, Brazil. "There's not enough time in the European Parliament and in the council to discuss it," said Wolken. The summit is scheduled for November. "The 2040 climate now is in the hands of the far right, the people who deny the climate crisis," said Austrian Green Lena Schilling, noting the importance of the urgency procedure to save the target. "We don't need 85pc, not 87pc — minimum 90pc," Schilling said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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EU proposes support package for chemicals sector


08/07/25
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08/07/25

EU proposes support package for chemicals sector

Brussels, 8 July (Argus) — The European Commission today proposed a package of measures to support the EU chemicals sector, aiming to address high energy costs, global competition and weak demand. The plan includes extending emissions trading system (ETS) compensation to more producers and simplifying fertilizer registration rules. The commission said the simplification measures could save the sector €363mn/yr. The proposals are part of a broader action plan to boost competitiveness and secure supply chains. A new Critical Chemicals Alliance will identify key production sites in need of policy support, including on trade issues such as supply chain dependencies and market distortions. The commission also pledged to apply trade defence measures more quickly and expand chemical import monitoring under an existing surveillance task force. While the commission stopped short of proposing a Critical Chemicals Act — which would legally define specific chemicals for support — it named steam crackers, ammonia, chlorine and methanol as "essential" to the EU economy. The alliance will aim to align investment and co-ordinate support, including through the bloc's Important Projects of Common European Interest (IPCEI) programme. The commission also decided on new rules legally defining low-carbon hydrogen today and said it plans to allow more state aid for electricity-intensive chemical producers by the end of the year. It also encouraged the use of carbon capture, biomass, waste and renewables. EU industry commissioner Stephane Sejourne said the action plan uses "all levers" to put the chemicals sector back on a growth track, with measures to retain steam crackers and other key chemical assets in Europe. He also highlighted efforts to secure domestic demand for "clean and made-in-Europe chemicals". The commission will align fertilizer registration rules with the EU's REACH chemicals framework, applying standard REACH provisions and streamlining the assessment of micro-organisms used in fertilizers. Officials said the changes will maintain safety and agro-economic efficiency standards while allowing a broader range of micro-organisms. For ETS indirect cost compensation, the commission plans to expand the list of eligible chemicals — including organic chemicals and fertilizers — but must first update existing state aid guidelines, a senior EU official said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Multilateralism should steer climate finance: Brics


07/07/25
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07/07/25

Multilateralism should steer climate finance: Brics

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