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The Brazilian government signaled that it intends to use the regulated carbon market as a tool to reposition the country’s industry in international trade and boost the competitiveness of sectors with lower emissions intensity, while preparing a gradual implementation of the Brazilian Emissions Trading System (SBCE), José Pedro Neves, deputy secretary of the Finance Ministry’s Extraordinary Secretariat for the Carbon Market, said during the Carbon Breakfast Briefing in São Paulo on Thursday May 21, organized by Fastmarkets, JGIM and Arcas Dias Advogados.
According to Neves, the government’s strategy goes beyond the environmental agenda and reflects an effort to turn the Brazilian economy’s decarbonization attributes into a commercial advantage for sectors such as steel, aluminium, biomass and biofuels, as climate-related criteria increasingly shape global trade.
Neves said the government sees room for Brazil to position itself as a supplier of “green metals” in global trade by drawing on the lower carbon intensity of the country’s steel and aluminium production.
The remarks come as the government advances regulation of the Brazil carbon market and intensifies discussions with industrial sectors on monitoring, reporting and verification (MRV) rules, registry infrastructure and future carbon pricing.
Neves said the SBCE will roll out in phases and that the initial inclusion of sectors will not mean immediate carbon pricing. The first cycle will focus on structuring MRV systems, then require two years of reporting before any compliance obligation or discussion on allowance allocation.
“When we talk about the first sectors entering, it does not mean there will be carbon pricing at the outset,” he said.
The deputy secretary said the government selected priority sectors based on three criteria: emissions volume, MRV readiness and degree of sector concentration.
Detailing the Finance Ministry’s strategy, Neves said the Brazil carbon market became a government priority in 2023.
In his view, beyond the business-generation potential of carbon credits, the government aims to create mechanisms that let Brazil incorporate its decarbonization into international trade negotiations.
“The carbon market is highly strategic both because of the volume of business opportunities and because of Brazil’s positioning as a provider of decarbonized production solutions,” he said.
Neves also highlighted the creation of an international coalition involving Brazil, China and the EU to discuss MRV standards, offset acceptance policies and carbon accounting in products.
On the regulatory front, the government is preparing the Brazilian Emissions Compensation Program, which will define accreditation criteria for methodologies accepted both in the regulated market and for exports under Article 6 of the Paris Agreement.
Neves said the proposal converts credits into Verified Emissions Reduction or Removal Credits (CRVEs), the only credits the Brazilian government will officially recognize within the future regulated Brazil carbon market. CRVEs would serve as a national environmental integrity certification and the government’s official seal of environmental integrity.
“We cannot allow corresponding adjustments using low-quality credits,” he said.
Neves also said the government plans to launch a public consultation in July on rules for exporting credits with corresponding adjustments.
At the same time, the Finance Ministry and SERPRO, the federal data processing company and state-owned technology provider, are developing the system’s central registry, while discussions continue on the design of the transactional infrastructure and interoperability with trading platforms.
According to Neves, representatives from industry and the financial sector raised questions about sectoral baselines, the legal nature of carbon assets, integration between registries and the economic consequences of future carbon pricing.
Neves acknowledged that several points are still under discussion but said the government intends to maintain a gradual implementation process based on dialogue with regulated sectors.
As the SBCE moves from MRV design toward pricing, the cost of carbon will start to sit inside Brazilian steel and aluminium export economics. Fastmarkets tracks carbon credit prices, compliance market design and the integrity standards that decide which credits clear for corresponding adjustments. Model what SBCE phasing and Brazilian green metals positioning mean for your sourcing and pricing with our carbon team.
Brazil is one of them. Use Country Profiles to track its SBCE phasing, CPS coverage, carbon credit use scenarios and NDC commitments – side-by-side with peers