EN 
ES
PTWhat is the current status of the Brazilian Emissions Trading System?
A 2024 decree established the general principles for the institutionalization of the carbon market in the country and the creation of the the Brazilian Emissions Trading System (SBCE), but further decrees and administrative orders will still be needed for the market to operate in practice.
To analyze the implications of this scenario, the promotion of innovation, and the SBCE’s connection to international regulations such as the CBAM, the latest episode of WayCarbon Talks brought together Bruna Araújo (Sustainable Finance Manager) and Henrique Pereira (COO), moderated by Lauro Marins (Head of Consulting and Digital Solutions). During the discussion, the experts highlighted what still needs to be done for the market to operate in practice and how companies can prepare for the upcoming scenario.
Status of the SBCE
The SBCE’s operational window spans from 2025 to 2030, during which time the government is expected to issue rules detailing how the market will function. “In 2025, the Extraordinary Secretariat for the Carbon Market was created, which acts as a provisional managing body; and the Permanent Technical Advisory Committee was inaugurated, which facilitates dialogue among productive sectors, the financial system, academia, civil society, and subnational governments,” explains Bruna Araújo.
Following that, in August 2026, a public consultation was launched on the MRV (Monitoring, Reporting, and Verification) rules, with the final version scheduled for publication in November, according to information from the Secretariat. “This is the first concrete step toward making the market operational, which represents tangible progress,” adds the expert.
Update: regulated sectors in the first wave
On October 29, the government issued an executive order, which established the official timeline for implementing MRV requirements for Brazil’s Regulated Carbon Market. The ordinance defined the gradual entry of economic sectors into the system in three phases:
- Phase 1, beginning in 2027: aluminum, integrated iron and steel mills, cement, oil and natural gas exploration and production, certain segments of the chemical industry, iron ore and bauxite mining, pulp and paper, and glass.
- Phase 2, beginning by 2029: ceramics, semi-integrated iron and steel mills, chemical industry activities not included in Phase 1, the food and beverage industry, mining of other mineral substances, oil refining, and the electricity sector.
- Phase 3, beginning by 2031: covers road, rail, and waterway transportation.
According to government, each sectoral phase involves a three-year preparation cycle. Within this framework, the first year is dedicated to submitting the monitoring plan for review and approval by the SBCE’s managing body. The second year involves measuring emissions and removals throughout the current year in accordance with the approved plan; and the third year involves submitting the verified report (covering the previous year) to the system’s managing body.
The role of MRV in the SBCE
The MRV framework aims to identify emission sources and factors, standardize methodologies, and consolidate data reporting. During the verification stage, an independent auditor validates the consistency and quality of the reported information. “For the SBCE to operate, emission limits and the allocation of allowances must be defined. It is precisely in this context that MRV comes into play: providing the technical basis for the government to reliably set emission thresholds and the distribution of allowances,” she adds.
Market opportunities
But this agenda is not limited to technical and environmental considerations. Business generation and innovation are the premises behind the decision to adopt an economic instrument such as the carbon market, explains Henrique Pereira. “However, in the short term, the technical discussion will still need to address the operational implications so that opportunities can be identified,” he says.
In the long term, three business elements can be identified:
- Pricing: By internalizing the price of carbon, the expectation is that companies will begin to consider GHG emissions and associated costs when making investment decisions (for the future) and managing operational processes (in the present);
- Financial and balance sheet shock: Decarbonization and generating financial results are not conflicting objectives. However, the market will need to establish conditions to make investments viable, especially in sectors with higher levels of debt;
- Operationalization: As the system matures, the trading of allowances will occur efficiently. Once the market is fully operational, it will be possible to assess the relationship between acquiring allowances from sectors with lower abatement costs and investing in emissions reductions within each sector.
“The expectation is that the market will promote cost-effective emissions reductions. At the same time, this mechanism can contribute to industrial efficiency, provided that CAPEX planning and efforts to preserve competitiveness take a medium- and long-term perspective. In other words, investments in decarbonization and regulatory developments must proceed in tandem, thereby reducing production costs, fostering innovation, and ensuring the competitiveness of domestic industry. Furthermore, given that part of Brazilian industry is already affected by international regulations, such as the European Union’s CBAM, the SBCE is likely to contribute to lower regulatory costs for international trade,” concludes Pereira.
Given the accelerated timeline, experts recommend that companies in the first waves prepare in advance through initiatives such as: reviewing the maturity of GHG inventories, assessing scenarios, and carbon pricing.
How can WayCarbon help?
With 20 years of experience in the climate agenda, WayCarbon supports organizations on their journey through complex regulatory landscapes. Contact our experts to understand the impacts of the SBCE on your sector and structure your transition strategy.
Watch the full episode (Enable automatic subtitles).
