Mar 21, 2013

The Brazilian Development Bank (BNDES), the state of Rio de Janeiro and the Acre Institute for Climate Change and Regulation of Environmental Services  (IMC) signed a technical cooperation agreement aimed at stimulating the development of a market for environmental assets in Brazil.

The document was signed on March 21 by the President of the BNDES, Luciano Coutinho, the Governor of Acre, Tião Viana, and the Secretary of State for the Environment of Rio de Janeiro, Carlos Minc. The Managing Director of the BNDES’ Environmental Division, Guilherme Lacerda, also attended the event.

This agreement paves the way to develop a carbon market in Brazil. The carbon market emerged in Europe in the previous decade so that companies could negotiate their carbon emission quotas, since many of them emit higher amounts than those allowed by governments. Due to this, they can buy shares from other companies to remain within the established limit.

In Brazil, structuring a carbon credit market is a challenge that will require the creation of regulatory standards and specific metrics for these assets.

The BNDES has participated actively in discussions concerning the creation of a carbon market, both in an environmental perspective, to foster a low-emission economy, and from the competitiveness viewpoint in the Brazilian industrial sector.

Among the possibilities created from this agreement is a knowledge network, exchange of experiences and training to provide support for companies to measure, manage and reduce their greenhouse gas emissions.

One of the efforts expected is that the BNDES and the governments of Acre and Rio de Janeiro will form a working group to discuss issues, such as taking inventories of corporate carbon. The inventory is a needed step so that companies can trade market carbon credits in a future voluntary emission market.
 
Another step is to define the reduction targets and how permitted carbon emissions will be distributed among market participants. From this distribution, participants can trade permitted emissions among themselves or buy carbon credits from other projects.

In addition to the carbon market, other assets may be discussed. The agreement seeks to give rise to a wide-ranging debate on environmental issues, such as water, biodiversity, among others, while laying the foundations to create environmental assets referred to in these issues, including regulation, standards, metrics and methods, for example.

The document was signed with the states of Rio de Janeiro and Acre because of their specific features. In Rio de Janeiro, discussions on the state carbon market have advanced significantly, and the state of Acre is a reference for credits arising from initiatives of Emission Reduction by Deforestation and Degradation (REDD). The agreement is open for other agencies and entities of Direct and Indirect Public Administration to adhere, and the BNDES is committed to incorporating new signatories.