New Rules Could Make Brazil a Carbon-Credit Powerhouse

Brazil appears to be entering a genuine moment of inflection. With the recent adoption of comprehensive carbon regulation, combined with global trends toward pricing carbon, the country may have a real opportunity to assume a position of leadership in the international carbon-credit market. But seizing that opportunity will require building institutional, regulatory, and verification systems with discipline, transparency and credibility.

New regulatory foundations

In December 2024, Brazil formally enshrined the Sistema Brasileiro de Comércio de Emissões (SBCE) into law with the enactment of Lei 15.042/2024 — a milestone establishing a domestic, regulated carbon-emissions trading market.

SBCE aims to create a legal, financial and institutional framework for the trade of emissions allowances (for companies emitting greenhouse gases) and carbon-removal certificates (for entities reducing or capturing emissions, for example via reforestation or other mitigation activities).

The law divides the market into two “tracks”: a regulated track, which focuses on sectors with high emissions subject to mandatory caps, and a voluntary track, which potentially embraces a broader set of carbon-credit projects — including sustainable forestry, land-use change, restoration, and other environmental compensation mechanisms.

Complementing SBCE, the government is also working on a Taxonomia Sustentável Brasileira (TSB) — a classification system aimed at defining which practices and projects qualify as “sustainable,” based on ecological, social and climate-related criteria.

This regulatory architecture promises greater legal certainty, predictable rules, and transparent criteria — all fundamental preconditions for building a credible domestic carbon-credit market attractive to investors and buyers worldwide.

Brazil’s natural and competitive advantages

Brazil possesses a combination of factors that give it a competitive edge in generating high-quality carbon credits — whether from removal (reforestation, restoration), preservation (forest conservation), or mitigation (emissions reduction in energy, industry, land use). A recent study by PwC Brasil estimates that, under its new legal and institutional framework, Brazil could generate up to 370 million tonnes of carbon credits by 2030. (PwC)

This potential is underpinned by key attributes:

• A historically cleaner energy matrix than the global average, reducing baseline emissions for many activities compared with peer countries. (PwC)

• A vast coverage of native forests, combined with large areas of degraded or deforested land — which present opportunities for ecological restoration, reforestation, or sustainable land-use change. (PwC)

• Rich biodiversity and accumulated environmental knowledge, which could serve as comparative advantages in markets that value carbon credits tied to strong environmental and social co-benefits (e.g. biodiversity conservation, water regulation, protection of indigenous lands). (Serviços e Informações do Brasil)

Taken together, these strengths — coupled with the new regulatory framework — could position Brazil as a major global supplier of high-integrity carbon credits, able to meet demand from markets concerned with emissions, sustainability, and environmental integrity.

External pressure, global integration and urgency to adapt

The global shift toward carbon pricing and carbon-accountability adds urgency to Brazil’s transformation. International mechanisms that penalize products and supply chains with high embedded emissions (for instance, border carbon adjustment mechanisms in major markets) already signal that carbon footprint and traceability will matter as much as price and volume. Indeed, Brazilian policymakers and industry actors — aware of that dynamic — see the SBCE and TSB not only as internal instruments, but also as a gateway to global integration. (Serviços e Informações do Brasil)

At the international arena of COP30, Brazil has proposed a new initiative: the Open Coalition on Compliance Carbon Markets — an international coalition aiming to harmonize carbon-market rules, verify and recognise credits across jurisdictions, and create interoperability among different carbon-credit systems worldwide. (COP30 Brasil)

This global integration could bring scale, liquidity, and international trust — all essential for a carbon-credit market to flourish. But the aspiration comes with obligations: credits must meet stringent standards of transparency, verifiability and environmental and social integrity.

The path ahead: what needs to be done for Brazil to convert potential into leadership

For Brazil to transform its regulatory advances and natural advantages into concrete leadership in the global carbon-credit market, several critical steps remain:

• Implementation of SBCE and regulatory governance: Although the law is in place, as of late 2025 the market still awaits full operationalization, in particular the establishment of the national allocation plan (Plano Nacional de Alocação), which defines sectoral quotas and the roadmap for emissions caps. Without it, SBCE remains largely “on paper.” (EY)

• Strong MRV (Monitoring, Reporting and Verification) and transparency mechanisms: Carbon credits — whether from emissions reduction, avoidance, or removal — must be backed by robust methodologies, transparent data, and accountability. Without that, credibility suffers and risks of “green-washing” or fraudulent credits increase. Policy and governance frameworks (via SBCE, TSB, and associated oversight) must prioritize integrity.

• Integration of regulated and voluntary markets under clear governance standards: The coexistence of a regulated carbon market (with emissions caps) and a voluntary market (for credits from carbon-removal or avoidance projects) demands clear rules, governance consistency, and mechanisms to prevent double-counting or misuse.

• Mobilisation of private investment and inclusive financing: For the carbon market to scale, investments are needed — in restoration projects, low-carbon technologies, sustainable land-use practices, verification infrastructure. The regulatory clarity provided by SBCE and TSB can attract both domestic and international investors. (Serviços e Informações do Brasil)

• Ensuring social and environmental co-benefits: Given Brazil’s biodiversity and role of traditional communities, credits should not only represent carbon balance — but also promote conservation, biodiversity, water quality, and social equity. The TSB, with its multi-objective classification (environmental, social, economic), can help anchor credits in a broader sustainability context. (EY)

  
  

Why this leadership matters — and what’s at stake

For Brazil, leading the global carbon-credit market would entail more than issuing credits: it would reshape the country’s role in the global transition to a low-carbon economy. It could transform natural forests and biodiversity into valuable assets, link conservation to development and social inclusion, and provide an economic incentive for sustainable land use.

But the stakes are high. If the market is implemented carelessly — without robust MRV, transparency or social safeguards — the risk is that carbon credits become mere “green vouchers,” undermining environmental integrity, harming local communities, and damaging Brazil’s reputation at a time when global scrutiny is rising.

By contrast, if anchored in strong governance, scientific rigor, and inclusive principles — combining climate mitigation, biodiversity, social justice and sustainable development — Brazil can turn its forests, lands and energy into a strategic advantage, contributing to global climate goals while creating new economic opportunities at home.

In short: the window to lead is open — but what matters now is how Brazil chooses to walk through it.

Sources:

• IETA — Working Paper “Alavancando o mercado de carbono do Brasil”. IETA

• Documento “O papel estratégico do Brasil no mercado de carbono” (PwC, 2025). PwC

• Decreto e documentação da Taxonomia Sustentável Brasileira (TSB). Bichara Advogados

• Análise sobre riscos e oportunidades para exportações brasileiras frente ao CBAM. IETA

• Reportagens sobre a coalizão internacional de mercados regulados de carbono apresentada na COP30. COP30 Brasil Amazônia | clearbluemarkets.com