In December 2024, Law No. 15.042/2024 was published, establishing the regulated carbon market in Brazil and initiating the Brazilian Greenhouse Gas Emissions Trading System (SBCE). This historic regulatory framework sets limits on greenhouse gas (GHG) emissions and regulates the trading of assets representing the emission, reduction, or removal of such gases, in compliance with Federal Law No. 12.187/2009 (National Climate Change Policy). The new framework ensures greater scale, transparency, and legal certainty.
Although the voluntary carbon market has been in place in Brazil for several years, involving transactions between companies that voluntarily aim to reduce and offset their GHG emissions, a legal framework for the regulated carbon market with mandatory emission targets remained pending.
According to the new law, the SBCE adopts the cap-and-trade system, through which the government will set an emissions cap for regulated sectors. Emission allowances, referred to as Brazilian Emission Quotas (CBEs), will be distributed, granting the right to emit one ton of carbon dioxide equivalent (1 tCO₂e). Operators—individuals or legal entities engaged in GHG-emitting activities—that emit less than the allowed limit can trade their surplus CBEs with those exceeding the established cap, creating an economic mechanism to promote emissions reductions. These allowances may be distributed free of charge or for a fee through auctions.
In addition to CBEs, the law establishes the Certificates of Verified Emission Reduction or Removal (CRVEs), which correspond to the verified reduction or removal of GHG emissions of 1 tCO₂e. These assets may be used by operators to offset emissions that exceed the allowed cap, provided they are generated in accordance with an accredited methodology and registered within the scope of the SBCE. The methodology will be established by a specific act of the SBCE’s managing body, which must comply with internationally recognized practices tailored to the Brazilian context.
The definition of emission limits will be the exclusive competence of the Federal Government, following the National Allocation Plan, which will determine sectoral caps and rules for distributing CBEs. Entities regulated under the SBCE are those whose operations exceed 10,000 tons of CO₂ per year—a technical criterion widely used in international carbon markets and adopted by the Brazilian legislation as the minimum threshold for mandatory reporting and monitoring. The law excludes primary agricultural production from mandatory regulation, as well as goods, improvements, and infrastructure linked to such activities on rural properties.
Regarding legally protected areas, the law innovates by establishing that the restoration, maintenance, and conservation of Permanent Preservation Areas (APPs), Legal Reserves (RLs), or restricted-use areas, as well as conservation units, may generate carbon credits. Such credits can be traded in both regulated and voluntary markets, turning environmental conservation into an economic value opportunity.
The implementation of the SBCE will be phased in five steps, each one with specific targets between 2025 and at least 2029.
Importance of the Law
Brazil is a potential country for generating carbon credits and can be regarded as one of the leading global powers in the carbon market. Operators and regulated sectors will need to overcome significant challenges, such as technological adaptation, effective emission monitoring, and harmonization among different existent legislations and initiatives.
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