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Brazil pulp industry and Brazil forest carbon are at a critical intersection, where commercial timber production meets climate-focused land management. This article explores how Brazil balances the demands of its thriving wood pulp sector with the expansion of forest carbon initiatives, highlighting the challenges and opportunities that shape its sustainable future. Read on for the main takeaways.
Key takeaways:
A look into how Brazil’s highly developed forest industry is generating value through multiple angles, from supplying traditional pulp & paper industries to playing a critical role in global climate action
Brazil’s forests stand at a pivotal intersection of economic development and climate action. On one side, the country is a global leader in the production of pulp and paper, with vast, fast-growing eucalyptus plantations spread across multiple regions. On the other, Brazil holds some of the largest opportunities for nature-based solutions for climate change mitigation, with a growing portfolio of conservation and restoration initiatives.
Both sectors depend on the same finite resources: forests and land. As demand for fiber and climate action grows, their overlapping footprints raise critical questions. Can multiple industries coexist within the country’s forests, or are they competing visions for the use of the same underlying resources?
Forest plantations, particularly those of eucalyptus and pine, are a major source of raw materials for pulp and paper companies in Brazil. These plantations are also being increasingly linked to carbon projects, with companies leveraging their carbon sequestration potential to offset emissions and generate revenue.
Planted forests account for only slightly more than 1% of Brazil’s total forest area, but supply all of the wood fiber for the pulp, paper and composite panel industries, as well as a major share of the wood used to produce lumber, plywood and charcoal. There are no woodchip exports from native forests in Brazil, and none are expected in the future.
Brazil has 10.5 million ha of planted forest as of 2024, including 8.1 million ha of eucalyptus, 1.9 million ha of pine and 500,000 ha of other species. Approximately 43% of eucalyptus plantations are located in southeastern Brazil, 22% in the midwestern portion and 18% in the southern regions. About 89% of pine plantations are located in the southern region of Brazil due to its subtropical climate, which is more conducive to pine development. The balance of the planted areas (500,000 ha) comprises other species like acacia, araucaria, teak and rubber tree (Hevea brasiliensis).
The largest concentration of eucalyptus plantations is in the states of Minas Gerais (2.2 million ha), Mato Grosso do Sul (1.5 million ha), São Paulo (1.0 million ha) and Bahia (640,000 ha). In 2020, Mato Grosso do Sul surpassed São Paulo to become the second-largest eucalyptus planted area in Brazil. We predict that Mato Grosso do Sul will surpass Minas Gerais within this decade.
Mato Grosso do Sul has increased its eucalyptus plantations by approximately 50% in the last decade, due to strong demand from pulp companies in the region, as well as those that will be built. Furthermore, part of the eucalyptus planted in the state supplies a pulp mill in the countryside of São Paulo. Of the eucalyptus plantations established by pulp and paper companies, by far the largest share consists of various clones of the hybrid E. urophylla x E. grandis (“urograndis”).
The largest concentrations of pine plantations are in the states of Santa Catarina (713,000 ha), Paraná (690,000 ha), Rio Grande do Sul (284,000 ha) and São Paulo (154,000 ha). Pine plantations are established by various clones of Pinus taeda and P. elliotti.
The Brazilian wood pulp and paper sector has demonstrated exceptional performance, serving as the most vital segment of the local forest industry and one of the most prosperous sectors of the economy, contributing significantly through job creation, tax revenue and foreign exchange earning.
Currently, Brazil is the second-largest producer of wood pulp in the world, trailing only the United States. Pulp production increased 183% between 2000 and 2020. In 2021, pulp production expanded to 22.5 million tonnes and reached a peak of 24.5 million tonnes in 2022. Although pulp production fell 1% in 2023 to 24.3 million tonnes, it quickly rebounded 4% to 25.2 million tonnes in 2024. We expect pulp production to rise 7% in 2025 to almost 27.0 million tonnes.
In 2000, only 40% of Brazilian pulp was exported, but this increased to 75% in 2020. Pulp exports totaled 18.6 million tonnes in 2022, then decreased 3% in 2023, but quickly bounced back 3% in 2024 to 18.6 million tonnes again. We anticipate that Brazilian pulp exports will increase nearly 8% in 2025 to a new record of 20.0 million tonnes. China and the United States are the major export destinations.
In contrast, the 51% expansion in paper and paperboard production since 2000 has been primarily consumed by the domestic market. Almost all the additional pulp production over the last decade has been in bleached short-fiber pulp from eucalyptus, with some expansion also in dissolving pulp.
The boom in Brazilian pulp production and exports can be attributed to internal factors influencing competitiveness, such as the high productivity of forest plantations and favorable climatic conditions that promote efficient forestry activities in Brazil, enabling rapid and high-quality growth cycles alongside comparatively low production costs.
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Brazil’s active forest carbon engagement amounts to 3.4 million hectares (ha) and is heavily concentrated in the states that house the Brazilian Amazon, reflecting its vital role in the country’s climate mitigation strategy. As of early 2025, over 3.0 million ha of the Brazilian Amazon alone were committed to active forest-based carbon projects, with over 7.8 million additional ha of REDD+ and other avoided deforestation projects under development in that biome.[1] The state of Pará has emerged as the clear leader in terms of area commitment, with approximately 1.3 million ha enrolled in active carbon-focused forest initiatives. This is nearly 50% higher than Rondônia, the next most active state in that list.
Beyond the Amazon, land managers in other biomes are beginning to engage. The Brazilian Midwest (i.e., Mato Grosso, Mato Grosso do Sul and Goiás) has a modest aggregated area of 235,000 ha of active forest-based carbon projects, primarily under REDD+ protocols. Although critically important for climate and biodiversity, this area is dwarfed by the Midwest’s position as the nation’s deforestation hotspot, with a combined deforested area of 43 million ha from 1985 through 2023.[2] That contrast emphasizes the potential for carbon finance to support ecological restoration and sustainable land use in the region.
Deforestation is not the only issue faced by the country; other challenges like a complex land tenure system and policy uncertainty are commonplace across multiple states of Brazil, potentially limiting the expansion rate of forest carbon projects. This is particularly important for projects backed by foreign investors, who are often hesitant to invest or have to resort to convoluted investment structures to enable capital allocation into timberlands in Brazil.
Still, the climate and financial benefits of forest-based carbon projects established in the region grant them significant attractiveness, driving interest from far beyond the pulp and paper industry to invest in the country’s forestlands.
The optimization of timberland management for carbon sequestration and for industrial wood production have very different agendas, although derived from the same land base. While one seeks to boost the climate action potential of standing forests, the other seeks to maximize the yield of fiber and biomass through intensive silvicultural interventions, making the overlap between Brazil’s wood pulp industry and the rise of the forest-based carbon markets one of the country’s most intriguing environmental and economic intersections.
Eucalyptus plantations that were once fully targeted toward industrial production are now being reframed as potential carbon sinks. Latin American companies like Suzano and Paracel have pioneered the integration of carbon projects in some of their industrial production, recognizing that fast-growing forests can sequester significant amounts of carbon when cultivated under specific conditions and with sustainable practices.
The ARR Horizonte project is a large-scale Afforestation, Reforestation and Revegetation (ARR) initiative developed by Suzano and the Brazil-based carbon developer WayCarbon, spanning over 15,000 ha primarily dedicated to eucalyptus plantations. That project aims to reforest areas degraded by cattle grazing activities, a major driver of deforestation in the Brazilian Cerrado.
While carbon credits are a significant source of value for the project, its timberlands remain productive, and Suzano actively sources logs on a seven-year harvest cycle for its pulp mills in Mato Grosso do Sul, a region that includes the largest single-line pulp mill on a global scale with capacity to produce 2.6 million tonnes of pulp per year. From a qualitative standpoint, ARR Horizonte challenges the widespread misconception that carbon projects result in inoperable areas.
Suzano successfully registered this project with Verra during the first half of 2023, and has issued and retired credits on behalf of Standard Chartered, Itaú Unibanco, Karoon Energy and its own operations, often in collaboration with third-party companies seeking to offset emissions from specific projects, such as packaging initiatives for the pharmaceutical company Merck and Grupo Boticário, one of the country’s largest beauty and cosmetics franchises.
Brazil faces a pivotal moment in the evolution of global carbon markets. The choices made now will determine whether its forests become a model for sustainable prosperity or a missed opportunity.
With vast landscapes, advanced technical expertise, and a growing network of carbon project developers, the country is uniquely positioned to drive meaningful progress in forest carbon initiatives. By prioritizing high-integrity projects, implementing transparent and consistent policies, and ensuring that benefits reach both rural communities and biodiversity, Brazil could set a new global benchmark for climate leadership while redefining the relationship between economic growth and environmental stewardship.
[1] Accounting for credits issued with Verra, American Carbon Registry and Gold Standard by the end of 2024.
[2] Source: MapBiomas.
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