Brazil President Jair Bolsonaro signed a decree on Monday to establish a national carbon market to cut greenhouse gas emissions, stating that “Brazil emerges as a powerhouse in this still new green economy sector.”
According to the new decree, unspecified economic sectors will be able to register their carbon footprints in a new registry and then propose an emission reduction curve within 180 days. This deadline may be extended for an additional 180 days.
However, critics argue the policy is too ambiguous and fails to address Brazil’s most serious climate issue — rapid deforestation in the Amazon rainforest.
According to a study conducted by the Brazilian nonprofit network Climate Observatory, deforestation accounts for nearly half of the country’s climate pollution. Furthermore, a study published in the journal Nature in 2021 said that the eastern Amazon is no longer a carbon sink for the Earth and has become a net carbon emitter.
It will be difficult for Brazil to attract investment to the carbon market if the high-profile issue of deforestation is not successfully addressed, warned Graham Stock, a strategist for BlueBay Asset Management.
Brazil must reduce deforestation if it wants to meet its broader commitments under the Paris Agreement, he added. The country has made pledges to end deforestation at the United Nations climate conference in Glasgow last year, “but that is not happening.”
According to Climate Watch, Brazil ranks sixth in the world for climate pollution.
The Latin American country has promised to reduce its carbon dioxide emissions by 43% by 2030. However, its greenhouse gas emissions increased by 9.5% in 2020, while global emissions decreased by about 7% due to COVID-19 pandemic lockdowns, according to Climate Observatory. Meanwhile, government data shows that deforestation in the Amazon increased by 22% last year, posing threats to the country’s road to decarbonization.