Systemica was present at the event and followed the main discussions on the carbon credit market, the Paris Agreement and what to expect from COP28
Yuri Alves, Coordinator of the Florestal Santa Maria project, was one of our representatives at the CBCC (Brazilian Climate and Carbon Conference), an event held by Aliança NBS, of which Systemica is part.
One of the panels addressed the challenges and opportunities of the Paris Agreement and the path to COP 28, which takes place in the United Arab Emirates between November 30 and December 12, 2023. “The panel discussed the importance of Brazil's presence at COP28, already that it has been some time since Brazil reached an aligned COP, in addition to a specific space for governors of the Amazon consortium. Brazil can bring good opportunities that will demand results and input into the carbon market”, explains Alves.
The panel also spoke about the expectation of a change in the format for presenting results by each country. “At this COP, the expectation is that it will begin with each country presenting its results, even if it is negative in relation to the goals. The important thing is to present reality”, he adds.
Final approval of the regulated market PL should positively affect the voluntary carbon market
Recently, the Senate Environment Committee approved the bill that regulates the carbon market in Brazil. The text was approved on a final basis, eliminating the need for a plenary vote, and should go directly to the Chamber for analysis. This decision is expected to impact the national and international market on the eve of COP 28, and the subject was discussed in detail in the panel “Regulation in Brazil: Interoperability between the Voluntary Market and the Regulated Market and the Impact on Companies”.
“The panel brought up the discussion that foreign companies expect Brazil to quickly resolve its regulated market so that they have the security of investing assertively and fulfilling what is necessary for their sector, which today adopt practices that they understand to be good, but not are necessarily in line with what the government expects for the sector. There is a fear of investing a lot in something that will later have no value under this regulation, causing insecurity. The expectation is that PL12 will help the market to take off once and for all”, analyzes Alves.
Compliance with the Paris Agreement would save up to 250 billion dollars by 2030
Signed in 2015, the Paris Agreement remains essential to the fight against climate change. In the fifth panel of the event, experts discussed the importance of Brazil generating a surplus within the National Determined Contributions (NDCs) scenario. Another topic was about Internationally Transferred Mitigation Outcomes (ITMOs), a mechanism that allows countries with greenhouse gas reduction surpluses to sell them to countries that have not met their targets.
“Brazil has generic NDCs (domestic targets that each country commits to follow), and with the approval of a regulated market, it will be possible to identify who is emitting and in what quantity. This will make it easier to identify areas where to encourage emissions reductions and where it is most cost-effective to meet NDC targets. It is worth noting that if countries widely adopted article 6 of the Paris Agreement to comply with their NDCs, they could save up to 250 billion dollars by 2030”, explains Alves.
Article 6.2 of the Paris Agreement provides for cooperation in the use of market mechanisms to achieve proposed targets (NDCs), and this includes the establishment of an international carbon market. Within the subject, article 6.4 provides that the parties must promote the environmental, social and governmental integrity of these market mechanisms, in addition to the sovereign participation of indigenous peoples and traditional communities. “Article 6.2 is already in progress, but 6.4 lacks the structure to be widely implemented. The foreign market already understands these values and therefore seeks and also supports an organization in the Brazilian market to be a supplier for this NDC service”, analyzes the specialist.
Nature-Based Solutions and ARR credits are part of Brazil’s sustainable future
ARR (Carbon Emissions Reduction and Removals) projects are part of an essential category to balance ecosystems by restoring degraded areas. An ARR project works with various techniques, such as planting seedlings, recreating ideal conditions for the restoration of fauna and flora biodiversity. Such projects, however, are expensive, as they require a lot of use of technology and take time to see tangible results. Yuri Alves analyzes that the Brazilian Climate and Carbon Conference brought a comprehensive discussion on the subject, which depends heavily on financing.
“In one of the panels at the event, the importance of ecological restoration was discussed, explaining technological challenges, mainly related to the lack of structure in Brazil (seed network, nurseries, social organizations and investment), since restoration involves many steps prior to planting that must be taken into account. Today Brazil has the potential to plant 150 million seedlings per year, and to reach the target by 2039 we would need a structure for 5.4 billion seedlings/year. Another statement countered this point, saying that there is a market willing to pay a lot for ARR credits, but there are technological challenges to guarantee the quality of these credits. An interesting phrase I heard is that 'for the market, REDD today is the banana in bulk that supports the market and the ARR is the blueberry that the market is willing to spend a truckload of bananas for,” he adds.
According to Yuri Alves, these projects that use nature-based solutions make a lot of sense within the Brazilian market, rich in biodiversity. “When we talk about NBS, the point is that the answer already exists, especially for Brazil’s goals. Nature-based solutions use nature to address problems brought about by deforestation and global warming. The forest already has an ideal way to be restored, we just need to imitate this ancestral technology. When we support an agroforestry initiative, for example, this is a nature-based solution. When we invest in a traditional community that produces nuts, this is also a nature-based solution. This type of investment is ideal for Brazil, and it is a subject that we saw a lot at the event and that should be repeated at COP28”.
