Will Brazil’s rural law limit carbon offsetting project volume?
Brazil should be well placed to benefit from renewed interest in forestry projects, but the country’s restrictive land laws could lead foreign investment to flow elsewhere.
On paper, Brazil should be one of the most attractive markets for carbon offsetting projects. The vast majority of carbon sequestration projects will come through forestry and re-forestry projects and the country offers huge scale and opportunity for both protecting and re-growing two types of forest biomes – the Amazon and the Atlantic.
Market participants have welcomed the evolution of the structure of the voluntary carbon offsetting market. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), led by former governor of the Bank of England Mark Carney, aims to encourage this growth by adding transparency around the rules and prices of such schemes. This rules and systems-based approach to carbon offsetting credits will allow greater corporate adoption of the tool as more seek to achieve carbon neutrality objectives.
André Vivan de Souza, partner at Brazilian law firm Pinheiro Neto, says he has seen investors anticipate the Taskforce’s final report, which was published on Wednesday, with renewed interest in carbon offsetting projects in Brazil.
“We are seeing growing interest in forestry projects linked to carbon offsetting, although most of the recent activity has been from people coming to try and start further issuance of credits for active projects or restart old projects that were shelved because the economics based on the sale of carbon offsetting credits was not favourable,” he says.