In 2009, Brazil adopted the National Policy on Climate Change (Política Nacional sobre Mudança do Clima, PNMC), aiming to identify, plan, and coordinate actions and measures for GHG abatement as well as to adapt to climate change. The PNMC lays out the basis for a carbon pricing regulation.
Several parallel and ongoing processes are considering the implementation of an ETS in Brazil. One is the “Consideration of Environmental Benefits in the Electricity Sector” under Law 14,120/2021, coordinated by the Energy Research Corporation (Empresa de Pesquisa Energética, EPE) and the Ministry of Mines and Energy, with the support of the International Energy Agency. In workshops organized by the EPE in 2021, stakeholders discussed the possibility of implementing an ETS in the power sector, as well as different design options. This proposal was open to public consultation in January 2022.
In May 2022, the government published Decree 11,075, which established the National Greenhouse Gas Emissions Reduction System, Sinare. The Decree requires the environment and economy ministries to develop sectoral climate change mitigation plans, including concrete emission targets, and establishes a roadmap for this process. It further calls for establishing “integration mechanisms with the internationally regulated market.”
The Decree was published in parallel to draft bills (Projeto de Lei, PL) aiming to regulate emissions trading. In particular, PL No. 2,148/2015 differentiates and forms a basis for two concurrent carbon pricing systems: (1) an emissions trading system, and (2) an offsetting system for registering and trading carbon credits. This bill and all its appendices will possibly bring new guidelines to emissions trading and enable its implementation.
The most recent legislative initiative is Senate Bill (PLS) 412/2022, which proposes the institution of the Brazilian Greenhouse Gas Emissions Management System, a national plan for the allocation of GHG emission rights. The plan will also establish the percentage of financial assets (based on verified reductions and removals of emissions) that may be used in association with the GHG emission rights to achieve the goals stipulated for each sector and for its companies.
As part of its activities under the World Bank’s Partnership for Market Readiness (PMR), the Brazilian government has carried out studies on the possible implementation of market instruments to meet its mitigation targets and reduce overall mitigation costs. These included the development of design options, economic and regulatory impact assessments, as well as an analysis of potential interactions between carbon pricing instruments and existing policies.
Since 2013, a group of leading companies have been participating in a voluntary ETS simulation to gain experience and develop proposals for an ETS in Brazil. The ETS simulation, which remains ongoing, is coordinated by the Centro de Estudos em Sustentabilidade at the Fundação Getulio Vargas.
Emissions & Targets
BY 2030: 50% reduction from 2005 GHG levels (target announced during COP 26) BY 2050: Climate neutrality (indicative objective submitted to the UNFCCC)
Ministry of Environment
Ministry of Development, Industry, Trade and Services