Law nº 15.042/2024 establishes the Brazilian Emissions Trading System (SBCE, in Portuguese), laying the foundation for a compliance carbon market in Brazil
Approved in December 2024, Law nº 15.042/2024 intends to create the legal framework for a compliance carbon market in Brazil - The Brazilian Emissions Trading System (SBCE, in Portuguese). It is now undergoing a crucial phase: the regulatory process. In the last few months, this process has gained momentum with the designation of the market's governing body, though on a temporary basis.
This involves the creation of the Extraordinary Secretariat of the Carbon Market (SEMC), linked with the Ministry of Finance. The Secretariat has strategic responsibilities to lead the implementation of the SBCE and organize the carbon market development in the country.
”This is a relevant institutional step that emphasizes the priority given to this topic within the national economic and climate agenda,” says André Escada, our Manager of Climate Policy and Institutional Relations.
Escada recalls that, although the law focuses on the compliance market, the advancements in this agenda also bring fundamental elements for strengthening the voluntary carbon market, for implementing Article 6 of the Paris Accord, and for integrating with jurisdictional programs.
The ecological restoration sector of the voluntary carbon market: solid economic and financial foundations will allow the sector to scale
The ecological restoration sector already has a solid technical foundation: recognized methodologies, robust governance, and growing operational capacity. The principal challenge, though, continues to be economic and financial.
Restoration projects have long maturation cycles and require intensive capital, similar to infrastructure projects. For this reason, Escada explains that it's essential to build appropriate financial instruments that are capable of reducing risks and attracting long term investment.
In this context, expanding access to international carbon markets, especially through Corresponding Adjustments under Article 6 of the Paris Accord, may be crucial for unlocking large-scale investments, increasing predictability, and positioning Brazil as a global reference in high-integrity forest removal credits.
The direct connection between SBCE and the voluntary carbon market
Though the SBCE is associated with the compliance carbon market, its regulations will have direct effects on the voluntary market. This is because the law establishes guidelines that influence eligibility criteria, registration rules, traceability, and conditions for accessing international mechanisms.
Thus, the way that the SBCE will be established in the secondary regulations may facilitate, or limit, the participation of ecological restoration projects in global markets.
What still needs to be outlined
What the regulation advances, some points will be decisive to ensure that the voluntary market has the security needed to develop.
Among them, Escada highlights:
- Eligibility criteria for carbon credits and methodologies
- The definition of clear rules for registration and traceability
- Operationalization of Article 6 of the Paris Accord, including the Corresponding Adjustments and the resulting possibility of access to international markets
- Guidelines for integration with jurisdictional programs
Escada points out that “it is essential to guarantee regulatory and tax predictability, preventing uncertainty from reducing the sector’s competitiveness and driving away the capital needed for long term projects.”
SBCE regulation represents a historic opportunity to create an attractive environment for investment in ecological restoration
Advancing carbon market regulation will enable Brazil’s connection to global markets and expand capacity to create climate, social, and environmental results at scale.
Building this regulatory framework will demand technical dialogue, institutional clarity, and active participation from the sector. According to Escada, “the challenge is great, but the potential is even greater: to make Brazil an international reference in high-integrity ecological restoration projects and in nature based solutions as strategic infrastructure for the country.”