New decree seeks to expand Brazil’s carbon credit market

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President Jair Bolsonaro on Tuesday issued a provisional decree that aims to stimulate the carbon credit market.

Under the new rules, public forest concession contracts now provide for the right to sell carbon credits.

Carbon credits can be obtained by reducing emissions or removing greenhouse gases and maintaining or increasing the forest carbon stock. Other possibilities include conservation and improvement of biodiversity, soil, and climate, as well as benefits for the ecosystem.

Furthermore, the provisional decree also defines that Brazil’s development bank (BNDES) can enable financial agents or fintechs, public or private, to finance carbon credit operations with resources from the National Fund on Climate Change (FNMC).

Before, only public banks Caixa and Banco do Brasil, as well as other public financial agents, could be qualified for this business.

Provisional decrees are immediately valid as law but expire if not sanctioned by Congress within 120 days. The text will expire on April 2, 2023, if not taken into consideration by Congress.