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BM&FBOVESPA, the World Bank and Brazilian studies and project finance agency FINEP announce the results as of today of five studies developed as part of the Strengthening Carbon Market Institutions and Infrastructure Project. Presentation occurs today in a seminar in Rio de Janeiro and on Wednesday (November 11) in São Paulo, in both cases from 8:30 am to 5:30 pm.
Taking part in the seminars will be senior energy specialist at the World Bank Energy Cluster for Latin America, Christophe de Gouvello; FINEP Chief Financial Officer, Fernando de Nielander Ribeiro; and BM&FBOVESPA Environmental, Energy and Metal Products Manager, Guilherme Fagundes.
The studies contain consolidated and contextualized information, which should contribute towards developing Brazil’s carbon market. The following subjects are covered: findings into CDM (clean development mechanism) opportunities in Brazil; findings into the barriers to and potentials for CDM programs in Brazil; a guide to the public sector’s role in CDM and the carbon market; regulation of environmental assets in Brazil; and the organization of Brazil’s carbon credit market. These subjects were selected after consultation with market participants, and also stemmed from the analysis of prior studies.
The project
The Strengthening Carbon Market Institutions and Infrastructure Project was coordinated by BM&FBOVESPA, following an agreement with the World Bank. This latter institution enabled investment of resources received from the Japan Policy and Human Resources Development (PHRD) Technical Assistance Program. Science and Technology Ministry-linked corporation FINEP, meanwhile, helped the Exchange implement the project.
Brazil’s potential and challenges
Brazil has a clean energy matrix that has obtained a high level of technological development in the case of biofuels. Counterpointing this, the “Low Carbon Study for Brazil” developed by the World Bank and published in July 2010, demonstrated that the country still faces a range of challenges, while having good local opportunities for cutting greenhouse gas emissions.
Since 1992, when the country hosted the United Nations Conference on Environment and Development (the Earth Summit), Brazil’s commitment in regard to climate change has become ever more apparent. This was reinforced by the December 2009 announcement of Brazil’s National Climate Change Policy, and consequently from the adoption of a national voluntary commitment to cut estimated greenhouse gas emissions up to 2020 by around 36%.
Brazil has also proved proactive in the global carbon market. However, discussions about the post-2012 scenario have led us to identify a need to develop the country’s carbon credits market, as an effective tool for mitigating global warming.
Findings about solid CDM opportunities in Brazil
The central objective was to identify the latent technical potential of low-carbon projects and to develop their implementation in Brazil. Despite the challenges of gathering disaggregated and detailed data about a wide range of industrial sectors, the authors of the study sought to identify the potential of reducing emissions per sector via mathematical models. In the same manner, estimates were made of the investments required for implementation of potential projects and of the existing barriers to implementation. There were almost 150 CDM methodologies studies in five strategic areas, describing reduction activities that could be carried out by companies ranging from breweries, cement factories, paper mills, meat processors, steel mills, agriculture, and transport firms, among others.
Findings into the barriers to and potentials for CDM programs in Brazil
The study into CDM programming sought ways of overcoming barriers to implementation of greenhouse gas reduction projects and activities. The authors suggest the rule that mechanisms should favor isolated greenhouse gas reductions has proved unviable. The study also points out advantages to the CDM Activities Program, such as the possibility of including new activities in the program at any given moment; the use of more than one underlying methodology in a single program; gains that can be had from scale; and reductions to transaction costs.
Guide for public sector action in CDM and in the carbon market
The study into public sector action highlights how the sector can use the CDM program as a particularly appropriate tool. The study also seeks to overcome some of the obstacles that have impeded public sector participation in the carbon market. According to the authors, this work underpins an understanding of the more prominent role that the public sector could have in CDM.
Regulation of environmental assets in Brazil
Existing regulation for the carbon market is another aspect analyzed in this project. This area is frequently singled out as deserving more attention if there is to be full development of the carbon market. The study’s authors, for example, carried out findings into the existence (or not) of tax and accounting treatment applicable to carbon credit trading in other countries. In this they sought to reflect on what would be the appropriate alternative for these credits within the context of Brazilian legislation.
Organization of Brazil’s carbon credit market
The study also analyzed the experience of other markets, thus seeking to create an effective proposal for a model in Brazil. Among the conclusions of the authors of this work was that the full operation of a domestic or regional carbon market will require the adoption of its own rules, of an appropriate and transparent trading platform and the development of trading instruments for the spot and derivatives markets.
COMPLETE PROGRAMMING: Rio de Janeiro / São Paulo
RIO DE JANEIRO
Date: November 9, 2010
Time: from 8:30 to 17:30
Locale: BM&FBOVESPA
Address: Rua do Mercado, 11, Loja, Centro, Rio de Janeiro/RJ
SÃO PAULO
Date: November 11, 2010
Time: from 8:30 to 17:30
Locale: BM&FBOVESPA – Abelardo Conference Hall
Address: Rua XV de Novembro, 275, 1st floor, Centro, São Paulo
