Carbon Credits in Brazil:Google search: carbon credits in Brazil

Brazil opens carbon credit market, September 15

ISNhttp://www.isn.ethz.ch/news/sw/details.cfm?id=12827

The Brazilian Development Ministry on Wednesday announced the launch of the region’s first carbon credit market in cooperation with the Brazilian Stock Exchange in Rio de Janeiro, in a move that paves the way for industry in developed countries to counterbalance high levels of greenhouse gas emissions by purchasing carbon credits in Brazil.

Since the Kyoto Protocol entered into force on 16 February, the Brazilian government has begun approving authorizations for company and project participation in clean development mechanisms (CDMs). Authorized companies and projects will then be able to sell carbon gas credits to companies in developed countries that are trying to meet the Kyoto Protocol demands for reducing green house gas emissions.

The Protocol stipulates that developed countries are to reduce green house gas emissions by 5 per cent, relative to 1990 levels, by a time window set between 2008 and 2012.

The Rio de Janeiro stock exchange will now serve as a platform for the Latin American market now operational between approved Brazilian CDMs and companies in developed countries that choose to purchase carbon credits from Brazil.

“In 21 years, each CDM project in Brazil could reduce emissions by 14 million tonnes,” Brazilian Ministry of Science and Technology Chief Coordinator of Research in Global Change, José Miguel, said in a recent interview with Brazilian news service Agencia Brasil.

An increase in CDMs in Brazil would be good for development, Miguel said, because these projects improve living standards. It is hoped they will create jobs and encourage renewable energy generation in Brazil. This year alone, Miguel expects some 30 projects to be approved.

The multi-step process of CDM approval will take time, however. The project identification documentation must first be submitted and validated. Next, the Brazilian Inter-Ministerial Climate Change Commission must approve it. This step represents a significant bottleneck, as the commission has many projects in the pipeline. Once approved, the project must get a stamp of approval from the United Nations Executive Board before receiving CDM authorization.

The first CDM project approved in Brazil, called Nova Gerar, is located in Nova Iguacu, Rio de Janeiro. It is a gas-to-energy project located at a sanitary landfill near the mouth of Rio’s Guanabara Bay. The landfill has the capacity to produce 18 million cubic meters of natural gas and receives 850,000 tonnes of domestic solid

waste per year. At maximum gas production, project developers expect the electricity produced to reach some 40 megawatts of power.

A similar project called Vega Bahia has also been approved. Vega Bahia will undertake to run a gas-to-energy project on the landfill that serves Salvador, Bahia.

A report recently released by Business News Americas, a Chilean-based news service, says both China and India may prove to be strong competitors in the emerging carbon-credit market, but that Latin America has a head start on its competitors because governments took action long ago. Now that the protocol has entered into force, countries such as Brazil are ready.

“But both India and China have the potential to dwarf Latin America completely,” Business News Americas Energy Features Editor Karl Royce, told ISN Security Watch, adding that, “high oil and gas prices may contribute to the development of the carbon credit markets, but it’s very much uncharted territory.”

Meanwhile, the World Bank reports that carbon sequestration projects submitted by Asian countries reached 51 per cent of total projects in 2003, up from 21 per cent in 2002. Conversely, in Latin America, the percentage of total projects fell from 40 to 27 per cent during the same time period.

Nevertheless, Brazilian observers are optimistic that a multi-billion dollar market may be fostered in Latin America.

According to Brazil’s Getulio Vargas Foundation consulting firm, which is an organizer of Wednesday’s carbon market launch, the Latin American carbon-credit market is expected to reach US$3.5 billion by 2007, 10 per cent of which is destined for Brazil.

http://www.redd-monitor.org/2009/01/15/why-is-brazil-so-interested-in-carbon-credits-for-forests-in-exhaustion/

Why is Brazil so interested in carbon credits for “forests in exhaustion”? By Chris Lang, 15th January 2009

On the final day in Poznan, a dispute took place between Saudi Arabia and Brazil over the Clean Development Mechanism (CDM). Saudi Arabia wants carbon capture and storage to be included in the CDM. Brazil wants carbon credits for “forests in exhaustion”. Saudi Arabia’s motivation is obvious. It wants to continue extracting and selling oil. But what is Brazil’s motivation? And what, exactly, are “forests in exhaustion”?

At around 22:00 on 12 December 2008, the monitor screens in the Poznan conference centre announced that the UNFCCC Plenary would be restarting at 22:15. While we

were waiting for the delegates to file in, someone handed me a copy of a draft negotiating text on the CDM.

The start of the closing Plenary Session, it turns out, had been delayed by an argument between Saudi Arabia and Brazil during negotiations about the CDM which took place behind closed doors. The compromise was a request to the CDM’s Executive Board to assess both proposals. But there are serious problems with including both carbon capture and storage and “forests in exhaustion” in the CDM. Even if the techniques of carbon capture and storage could be developed so that it is 100 per cent sure that the carbon will not leak back into the atmosphere, including carbon capture and storage in the CDM would do two things. First, it would create a subsidy for oil extraction, meaning that every last drop of oil is likely to be extracted, no matter what the environmental and social costs. Second, by trading carbon credits, it would allow pollution to continue elsewhere, guaranteeing that there is no overall reduction in greenhouse gas emissions.

I admit that I’d never heard of “forests in exhaustion”. But neither had anyone else, outside the Brazilian delegation, it seems. When I googled the phrase a few days after the Poznan meeting, there were no hits. Now there are four — all related to the last minute CDM discussions at Poznan. I asked one of the government delegates, who explained that Brazil is asking for carbon credits for industrial tree plantations that have over several rotations sucked so much water and nutrients out of the soil that the trees will no longer grow fast enough for the plantation to be managed as a commercial venture. In other words, these “forests in exhaustion” are abandoned plantations, not forests.

UPDATE, 6 April 2009: A couple of colleagues have written to correct my understanding of “forests in exhaustion”, for which I’m grateful. Currently, any plantation established on land that was forested after 1 January 1990 is excluded from the CDM. Brazil hopes to overturn this ruling by arguing that severely degraded logged-over forests (i.e. “forests in exhaustion”) store little carbon and that the only way of storing more carbon on the land is by planting trees. This would create a massive subsidy for industrial tree plantations. See Why Brazil is interested in “forests in exhaustion” for further details.

At a side event about the Amazon Fund the previous day, Brazil’s Minister of Environment, Carlos Minc, said that its proposals for reducing the rate of deforestation in the Amazon will not create any carbon credits or rights to emissions. But under its proposals for the CDM, Brazil does want carbon credits from abandoned industrial tree plantations.

As REDD-Monitor has previously pointed out, the UNFCCC forest definition fails to differentiate between forests and plantations. Meanwhile, Brazil’s government representatives talk about reducing the rate of “net deforestation” — meaning that old-growth forests could be clearcut, replaced by soya or sugar plantations and an equivalent area planted with monoculture tree plantations. With the current definition of forests, the UNFCCC would not notice the difference.

Brazil already has two extremely controversial industrial tree plantation projects which are attempting to register under the CDM in order to claim carbon credits for their operations. One is run by Plantar and the other by Valourec & Mannesmann. The companies claim that these vast areas of eucalyptus plantations are reducing greenhouse gas emissions by producing charcoal for the steel industry. The argument runs that if it did not use charcoal from eucalyptus plantations, then the steel industry would use coal. Neither of these plantation companies is currently registered with the CDM, although both have had applications underway for several years.

One possibile explanation for Brazil’s interest in “forests in exhaustion” to be including under the CDM is that it would create a whopping new subsidy for the establishment of plantations in Brazil. Under this proposal, companies could abandon all or part of their existing plantations and claim credits under the CDM. Then they could use this subsidy to take over even more land for new plantations.

Plantar and V&M both inflict massive social and environmental impacts on the local communities living near the plantations. In 2002, World Rainforest Movement produced a report which documents these impacts in detail. WRM’s researchers noted “an atmosphere of repression and fear” and did not name the people interviewed in their report. They emphasised their “concern over the fear these interviewees feel”.

In 2006, journalist Heidi Bachram wrote in Red Pepper magazine that when she visited the V&M plantations, a villager told her that “The threat to workers and people here is great. Shots have been fired on people by the armed guards. They feel prisoners within their own lands.” Also in 2006, a local community submitted an international complaint, pointing out that the destruction of the native cerrado (savannah) vegetation has left the community without access to firewood and fruits and has led to the drying up of the Cana Brava River. V&M’s response was to increase the pressure on the community.

In February 2007, armed guards employed by V&M shot and killed Antonio Joaquim dos Santos in front of his 16 year-old daughter. He was collecting firewood.

Although these companies are managing industrial tree plantations and not forests, the examples of Plantar and V&M give a warning message about the dangers of REDD. Both companies prevent local people from entering the plantations to gather fuelwood. By increasing the value of forests to corporations and states there is a real danger that REDD will lead to similar situations with armed guards patrolling forests to protect their carbon investments from local communities.

One response to this argument is that REDD is developing standards, which are to be monitored by independent third-party assessors. But when dos Santos was shot, V&M’s plantations were certified. And not under any old rubber stamp certification scheme. V&M’s plantations were certified under what is widely regarded as the best forestry certification system in the world: the Forest Stewardship Council. FSC ignored calls from Brazilian NGOs to withdraw the certificate. After the shooting, V&M announced a “voluntary decision to leave FSC”. This has, apparently, made no difference to V&M’s CDM registration process.

Tags: Carbon Credits, CDM, Forest definition, FSC, Poznan | Category: Brazil |

1 comment to Why is Brazil so interested in carbon credits for “forests in exhaustion”?

Chris Lang

January 16th, 2009 at 3:11 pm

A colleague suggested that I should clarify that “both V&M and Plantar are CDM registered for the more efficient charcoal ovens component of their CDM applications, they just never succeeded to date to get the plantations part registered.”

Brazil Seals Biggest Carbon Credit Deal with KfW

Date: 10-Apr-06Country: BRAZILAuthor: Denise Luna

Econergy International, the New York-based clean energy investment, management and consulting group which is responsible for the deal, said local company Biogas's project to generate electricity from garbage sold carbon credits worth 1 million tonnes in reduced gas emissions to German state development bank KfW.

The credits will be passed on to KFW's industrial clients in Europe.

Carbon credits are a market mechanism set up by the Kyoto protocol, which aims to reduce the emission of gases linked to global warming. Industries in developed countries have limits on the carbon dioxide (CO2) they can emit.

If they exceed them they must pay a fine or buy allowances from companies that undershoot their targets. Being a developing country, Brazil is exempt from Kyoto targets for emission reductions and the nation's companies can sell carbon credits to foreign companies that exceed their caps.

The main beneficiaries of this market are companies with projects that reduce pollution emissions, such as landfill sites, biodiesel or ethanol production, and reforestation.

In total, the Biogas project, which is a partnership with Sao Paulo mayor's office, should generate 8 million tonnes in carbon credits until 2012, which will be negotiated later.

The project receives half of all waste in South America's biggest megalopolis, Sao Paulo, or about 80,000 tonnes per day, and uses the methane gas from the waste to generate 22 megawatts of electric power.

"That is the biggest contract signed so far in the world. We've been negotiating since 2004 and now we got U.N auditing and approval," Marcelo Junqueira, Econergy's vice president for transactions, told Reuters.

He would not reveal the value of the deal, saying only it was above 15 euros per tonne, which is normally paid in the world for deals of up to 500,000 tonnes.

"No project that size has carbon credits that already have been generated, which means they are for immediate delivery," Junqueira said.

Econergy said the world carbon credit market registered deals worth 9.4 billion euros last year, up sharply from only 377 million euros in 2004.

Out of 207 carbon credit projects registered by the United Nations, 45 are Brazilian and 21 are managed by Econergy. These include a wind-powered electricity generation park and power projects based on sugar cane bagasse.

Last year, Rio de Janeiro's Commodities and Futures Exchange started trading in the credits.

© Thomson Reuters 2006 All rights reserved

http://www.financialexpress.com/news/China--India-and-Brazil-ahead-in-carbon-credits/551570/

BRIC PLUS

China, India and Brazil ahead in carbon credits

P Raghavan Posted: Wednesday, Dec 09, 2009 at 0000 hrs ISTUpdated: Wednesday, Dec 09, 2009 at 0000 hrs IST

Similarities and disparities among BRIC countries in different spheres of economic activity have been well-documented. But one area where the disparity is most visible is in emission trading whereby countries having commitments under the Kyoto Protocol use market mechanisms to acquire emission units from other countries and use them to meet a part of their targets. This clean development mechanism (CDM) allows emission reduction projects in developing countries to earn certified emission reduction (CER) credit by reducing greenhouse gas emissions which are then sold to industrialised countries to meet a part of the targets.

While China, India and Brazil heads the list of countries earning the maximum carbon credits, Russia is nowhere in the picture with its contribution limited to a few joint investment projects commissioned recently. Most recent numbers show that there are 4,782 CDM projects in the pipeline, of which 1,915 are registered, 2,590 are under

validation and 277 are still registration requests. And so far, only about 605 of the registered projects have issued 355 million CER credits where each CER is equal to 1 tonne of carbon dioxide.

China holds the maximum share with 1,895 CDM projects, or 39.6% of those in the pipeline, followed by India with 1,207, or 25.2% in the pipeline. Brazil, with 347 projects, accounts for 7.3%. The fourth major contender is Mexico with 162 projects and a 3.4% share.

The total emission reduction potential of the 4,782 projects is 661 million CER credits and this is expected to go up to 2,820 million CER credits by 2012. The 1,895 Chinese projects currently have an emission reduction potential of 371 million CER credits that will increase to 1,544 million credits by 2012, accounting for 54.8% of the global share.

India comes next with the 1,207 projects, having an emission reduction potential of 112 million CER credits that will go up to 454 million CER credits which is only 16.1% of the total. Brazil’s current contribution to the emission reduction potential from its 347 projects in the pipeline is 30 million CER credits that will move up to 171 million credits by 2012, accounting for 6.1% of the global potential.

One highlight of the CDM projects in the BRIC countries is the disparity in the number of CDM projects and the emission reduction potential. While China has a 39.6% share of projects, its emission reduction potential is expected to be...

http://www.iflr1000.com/LegislationGuide/170/Carbon-credits-are-not-securities.html

Carbon credits are not securities

Ronald Herscovici and Mauricio Teixeira dos SantosSouza Cescon Barrieu & FleschSão Paulo

The Brazilian Securities Commission (CVM) has recently announced its position in connection with the so-called Certified Emission Reductions (CERs) and the investment products derived from them, as well as on the possibility of their acquisition by investment funds and the ways of financing projects to generate CERs through capital market transactions.

The communication covers the following: (i) the reasons why CERs (commonly called carbon credits) should not be considered securities; (ii) the nature of some financial products derived from carbon credits, which, depending on their characteristics, can be considered securities; and (iii) the use of structures regulated by the CVM in the secondary market or to finance projects intended to generate carbon credits.

Carbon credits

Carbon credits are instruments issued by an entity linked to the United Nations that vouches for the non-emission of a certain quantity of greenhouse gases (which contribute to global warming). These instruments were conceived as part of the Kyoto Protocol, which took effect in 2005, by means of which greenhouse gas emission targets were established for developed countries between 2008 and 2012.

The so-called Clean Development Mechanism (CDM), a procedure created under the Kyoto Protocol to permit developing countries to participate in the joint effort to prevent global warming, allows for the certification of projects to reduce emissions by entities in those countries and for the subsequent sale of the resulting CERs generated (according to certain methodologies and procedures). The CERs acquired can then be used by companies in developed countries to help them achieve their reduction targets.

In the CVM's view, the CDM permitted: (i) the creation of a type of asset that can be transferred; (ii) the definition of potential venues for trading these assets; and (iii) the establishment of an effective secondary market for carbon credits, with the emergence, for example, of specialised intermediaries.

Therefore, and since they are a relatively new type of financial instrument, the definition of their legal nature became essential for purposes of formulating their regulatory framework in Brazil.

The legal nature of carbon credits

According to the CVM, carbon credits cannot be classified as securities, both because they do not have the nature of a derivative instrument and do not fit under the concept of a collective investment agreement, the two categories of securities with which they are commonly identified.

According to the CVM, carbon credits are redeemable instruments, in the sense that they can be transformed into a determined type of concrete economic advantage. In this sense, they cannot be considered to be derivatives, because they do not derive from any underlying instrument.

With respect to their classification as a collective investment agreement, carbon credits would have to be:

(i) instruments intended for investment;

(ii) in a collective undertaking;

(iii) with the expectation of profits; and

(iv) that result from the efforts of the entrepreneur or other parties rather than the investors themselves, because they are by definition passive in relation to the production of the results.

Therefore, considering that on the acquisition of CERs there is no link established between the acquirer and the economic agent that is carrying out the CDM project;

and CERs do not generate, by their very nature, financial returns and therefore do not qualify as a financial investment, the CVM took the position that carbon credits cannot be classified as securities under the category of collective investment agreements.

Regulating carbon credits

Since carbon credits: (i) are issued as a result of a specific procedure, duly certified by entities with authority to do so; (ii) once issued are no longer linked to the entity that implemented the corresponding emission reduction project, thus becoming mutually fungible; and (iii) are offered essentially by means of private placements, investors would gain little or no benefit if the CVM held it has authority to regulate them as securities.

The issuance of carbon credits already counts with sufficient procedures for validation, certification and control, so they do not need a specific regulatory regime. Nevertheless, other products related to CERs, if they fit under the definition of securities, may be subject to regulation by the CVM.

Acquisition of carbon credits by investment funds

Carbon credits, even though they are not characterised as securities, can be classified as financial assets and as such may be acquired by investment funds.

However, according to the CVM, carbon credits must be considered as assets issued abroad, making it necessary to satisfy one of the following requirements for their acquisition by the fund: (i) be listed for trading on an exchange or registered in a system duly authorised in the country of origin, supervised by a recognised local authority; or (ii) have their existence assured by the fund's custodial institution.

Furthermore, in the case of acquisition of other types of instruments, such as certificates representing the future right to buy or sell carbon credits and other derivative or synthetic instruments created and traded in Brazil, these assets must be, according to the CVM: "Listed for trading on a commodities and futures exchange or registered in a system for registration, custody or financial settlement (clearinghouse) duly authorised by the Brazilian Central Bank, in its respective areas of competence."

Financing of carbon credit projects

According to the CVM, the Brazilian market already has instruments able to finance projects associated with the generation of CERs, which includes the so-called private-equity investment funds. It is also possible to use non-standardised receivables investment funds and real-estate investment funds to finance or structure projects with potential to generate carbon credits.

The CVM, however, recognised that there is a constant need to analyse proposals to create new project financing mechanisms because of the continuous development of the country's financial and capital markets.

http://www.carbonpositive.net/viewarticle.aspx?articleID=1744

Forecast $16bn in Brazil forest carbon credits

Carbon News and Info>

Climate change news>

Forest carbon & sustainability

Monday, 23 November 2009 Brazil stands to earn up to $16 billion a year in carbon market payments for protecting the Amazon rainforest, the Brazilian Carbon Markets Association says. The estimated range of the annual value of potential carbon credits that could be generated from avoided deforestation activity is $8bn to $16bn, Flavio Gazani, head of the Association, told Reuters, although the figures would appear to be optimistic.

The UN’s REDD initiative is currently drafting plans for an international payment system to fund forest conservation in developing countries from 2013. Negotiations are advancing slowly, however, as with most aspects of a new global climate change agreement that was to be concluded at Copenhagen next month.

The Brazilian government has set ambitious targets to cut national carbon emissions from industry and land use as its contribution to the UN negotiating process. And the overall emissions reductions target relies heavily on the contribution from the forest sector. Gazani says that carbon credits from protecting standing forests would make the target easier to achieve.

The government has come around to supporting a market mechanism to underpin REDD, after originally favouring a fund-based approach bankrolled by developed world governments, Reuters said.

Gazani says that Brazil should consider the forest carbon opportunities from the existing voluntary carbon market as well as any emerging UN regulated market. The voluntary market is currently providing direction to the design of a huge potential US market in REDD carbon credit offsets, one of the underpinnings of cap and trade laws being debated currently in Congress.

The basis of Gazani’s estimates were not revealed but at industry ballpark estimates of $5 per tonne for REDD carbon credits, it is hard to see how the forecasts billions could be achieved, even if building up to those levels over time. It would require 1.6 billion tonnes of avoided carbon emissions to generate $8 billion in credits, equating to many millions of square kilometers saved from clearing every year. Amazon deforestation was 7000 square kilometres in 2008-09, down from 13,000, according to official figures.

A slowing in deforestation in Brazil reduces the potential size of REDD payments by lowering the national deforestation baseline against which emission savings would probably be calculated.

Related stories:Brazil cuts deforestation, sets emissions targetLand-based offsets stay central to US climate billREDD & Copenhagen: The state of play

http://www.bloomberg.com/apps/news?pid=20601086&sid=at0BYn3fpSpU

Brazil Wants Limits on Tropical Trees for CO2 Credits (Update1) Share Business Exchange Twitter Facebook | Email | Print | A A A

By Jeremy van Loon and Adriana Brasileiro

Dec. 2 (Bloomberg) -- Brazil, whose Amazonia rainforest is the biggest in the world, wants a new climate agreement to limit the use of forests to slow global warming, putting a crimp on investors hoping to create carbon credits from trees.

South America’s largest economy will make the forestry proposal at next week’s climate summit in Copenhagen, where about 190 countries are trying to establish new reductions in greenhouse-gas emissions, Environment Minister Carlos Minc said.

Brazil will support a United Nations plan to save trees provided industrialized nations agree to use a maximum of 10 percent of their emissions targets to invest in forest projects, Minc told reporters. Otherwise, richer countries may overuse the program at the expense of making carbon cuts at their own factories and power plants, he said.

“After five rounds of negotiations with the governors from the Amazon, we decided to incorporate REDD in our national proposal but under certain conditions,” the minister said yesterday in Brasilia, using the initials for the UN’s “reducing emissions from deforestation and degradation” plan.

Brazilian leaders may even wind up keeping Latin America’s most populous nation largely out of the carbon market. Ecuador, Bolivia and Costa Rica -- and not Brazil -- may generate the most carbon credits for participants, carbon market analyst Aimie Parpia said yesterday in an interview from London.

“Even though Brazil has the highest physical potential, it always looked unlikely that it will see much project activity,” Parpia said. That’s because the nation didn’t want to join a forest-protection market for credits. “Today’s announcement suggests that that they may be softening their stance.”

Amazon Deforestation

Brazil, with one-third of the world’s tropical forest cover, said last month it would offer to reduce its emissions by 38 percent to 42 percent from current projections for 2020. Slowing deforestation in the Amazon would generate about half of that reduction, it said.

Trees absorb carbon dioxide, the main man-made gas scientists blame for global warming. Removing forests to create pasture or room for mining projects or homes adds to the greenhouse effect that helps warm the planet.

Without Brazil, fewer credits will be offered to utilities such as American Electric Power Co. and PacifiCorp, owned by Warren Buffett’s Berkshire Hathaway Inc. , under the plan being negotiated at the climate summit in Copenhagen this month.

Credits from preserving forests are going to be an important “transition” for economies including the U.S. that will likely need to meet CO2 targets without the technology ready in the near-term to do so, said Mark Tercek, a former Goldman, Sachs & Co. partner who heads The Nature Conservancy, which established a REDD project in Bolivia.

California to Bolivia

The Nature Conservancy has worked for a decade with American Electric, BP Plc and PacifiCorp, which owns seven hydroelectric dams on the Klamath River in Oregon and California, to create credits from forests in Bolivia.

The group spent about $11 million to buy out logging concessions, pay for monitoring and enforcement of the ban on logging, and help Bolivians to adapt their use of the forest.

“Forestry is going to be a very important tool in reducing carbon emissions because you can get very significant reductions fairly quickly,” said Melissa McHenry, a spokeswoman for AEP. She said the company aims to use the least expensive option for cutting emissions, including credits from forest protection.

Nations with tropical forests will need $10 billion to $40 billion in annual incentives not to turn their forests over to timber and agriculture industries, New Zealand said in a proposal to the UN Framework Convention on Climate Change, the Bonn-based supervisor of climate-protection treaties.

Preserving Trees

Under the Brazilian plan, only one-tenth of the gas reductions assigned to a developed country under any new climate accord could be covered by preserving trees,.

“If the target is a 30 percent emissions reduction, we propose a limit of 3 percent for the purchase of compensatory REDD credits,” Minc said.

Another condition Brazil will propose is the contribution by developed countries of 0.5 percent to 1 percent of their gross domestic product each year into a global fund to help poorer nations mitigate the effects of climate change.

The UN-sponsored REDD plan, which would reward investors in forest preservation with either aid or tradable carbon credits, will be debated by envoys from about 190 nations in the Danish capital at the negotiations starting Dec. 7.

To contact the reporters on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

Last Updated: December 2, 2009 06:37 EST

http://online.wsj.com/article/BT-CO-20091126-706293.html

NOVEMBER 26, 2009, 3:09 P.M. ET

Brazil's Sadia Food Co Gets UN Carbon Credit Certified

SAO PAULO (Dow Jones)--Brazilian food company Sadia said Thursday that it has been accepted to be a part of the United Nations' Clean Development Mechanism project, which will allow the company to sell carbon credits next year.

"We are very interested in entering this market and are now starting to account for, and accumulate carbon credits to sell next year," said Sadia CEO Jose Julio Cardoso de Lucena.

Sadia's four-year-old hog farm program called 3S qualified for the UN project, which are the only projects that form part of the international carbon trading system set in motion by the Kyoto Protocol to reduce carbon emissions in to the atmosphere. Polluting industries can buy carbon credits from nonpolluting companies on the open market on exchanges like the Chicago and European Climate Exchange.

Sadia carbon credits will are UN Certified Emission Reduction tradable credits, the first for a Brazilian food company.

CEO Lucena did not say just how much the company expects to generate in revenue from carbon trading.

Sadia is a subsidiary of Perdigao (PDA). The two companies merged this year to form BRF Brasil Foods, but the deal has not yet been approved by the Brazilian anti-trust department.

Hog farming is a larger contributor to methane gas into the atmosphere. Sadia invested around 60 million Brazilian reals ($34.3 million) in biodigestor equipment to treat animal waste and turn it into fertilizer or energy, reducing carbon emissions by as much as 21 times.

Around one-third of the Sadia's 3,500 contract farmers are currently part of the 3S program. The number is expected to eventually incorporate the majority of Sadia outsourced and owned hog farms, as well as Perdigao partner farms once the two companies are completely integrated, Lucena said.

BRF Brasil Foods is Brazil's leading chicken exporter and owners of the two top selling food brands in Brazil.

-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com

http://www.redd-monitor.org/2009/01/23/brazils-national-plan-on-climate-change-and-the-amazon-fund-%E2%80%9Cthis-plan-does-not-create-any-carbon-credits-or-right-to-emissions%E2%80%9D/

Brazil’s National Plan on Climate Change and the Amazon Fund: “This plan does not create any carbon credits or right to emissions” By Chris Lang, 23rd January 2009

On 11 December 2008, the Brazilian government organised a side event in Poznan to explain the National Plan on Climate Change and to present the Amazon Fund. The National Plan on Climate Change was launched on 1 December 2008 by president Luiz Inácio Lula da Silva. The timing was interesting. Coinciding with the first day of COP 14 in Poznan, the country with the largest area of forest in the world announced its climate change plans, which include reducing deforestation but excludes the possibility of trading the carbon stored in its forests.

At the side event, Suzana Kahn Ribeiro, State Secretary, Ministry of Environment, explained that Brazil’s National Plan on Climate Change was based on a very participatory process. The plan is an important instrument for national climate policy. The two main challenges in achieving the objective of reducing greenhouse gas emissions are emissions from land use, land use change and forestry and to follow a low carbon path of development.

The plan focusses on seven areas:

1. Low carbon development2. Renewable electricity3. Biofuels4. Deforestation5. Forest cover

6. Vulnerability and adaption7. Research and development

She told us that Brazil wants to keep a high share of renewable energy in the energy matrix. Kahn talked about encouraging the Brazilian ethanol programme, which is to be carried out, “in a sustainable way, without deforestation or things like that”. Ethanol crops are to be established on “degraded areas”.

Under the plan, deforestation is to be reduced by 70 per cent by 2018, which would avoid 4.8 billion tons of greenhouse gas emissions. Brazil wants “to eliminate net loss of forest cover by 2015”, Kahn said. “This is not a package, the plan is not closed,” she said. “We want to improve the plan.”

In his presentation of the Amazon Fund, Tasso Rezende de Azevedo, Director-General, Ministry of the Environment, told us that the aim of the fund is to combat deforestation and to promote sustainable development in the Amazon. 22 million people live in the Amazon, he said. 85 per cent of the Amazon is forest. 15 per cent was deforested in the last 30 years. Between 2004 and 2008 an area the size of Germany was put into protected areas in the Amazon. Recently, the government recovered 1.4 million cubic metres of illegal wood and 700 people were put in prison. Brazil has three million hectares of “forest” certified under the Forest Stewardship Council certification system.

Azevedo did not mention that the FSC certified “forest” is not all forest – some of it is monoculture eucalyptus plantations, such as these belonging to Veracel in the northeastern state of Bahia. In mid-2008, a Brazilian Federal court fined Veracel US$12 million for clearing an area of Atlantic Forest to make way for its plantations. The company remains FSC certified.

Since 2004, the deforestation rate has decreased, Azevedo told us, although he acknowledged that in 2008, the rate of deforestation is once again increasing.

The goal is a 70 per cent reduction in deforestation by 2018 over the average between 1996 and 2006. “We think that REDD is an excellent opportunity,” he said. The Amazon Fund is a private fund. The aim is to raise US$21 billion from governments and corporations. Any project funded through the Amazon Fund has to comply with Brazil’s National Plan on Climate Change.

Azevedo told us that Brazil’s calculation for carbon emissions avoided from reduced deforestation involves multiplying the area of deforestation avoided by 100, “even though there is a range of carbon stored in Amazon forests”, he added. If the rate of deforestation goes over the target, the target for the following year will be reduced by the appropriate amount.

“This plan does not create any carbon credits or right to emissions,” he said.

The next presentation was from Paul Todescan Lessa Mattos, chief of staff, Presidency, at the Brazilian Development Bank (BNDES). In 2008, BNDES disbursed US$40 billion, plus US$30 billion in private equity. He told us about the environmental policy that BNDES follows and about “the strict system that BNDES has before it agrees disbursements”.

He told us that BNDES is the financial manager of the Amazon Fund and that the Bank is opening a subsidiary in London to raise funds for the Amazon Fund.

Luiz Machado, Chair of the Ad Hoc Working Group on Long-term Cooperative Action, told us that Ban Ki-moon had said that Brazil is developing the world’s greenest economy. “The challenge of climate change requires unprecedented flows of finance,” he said. “It is consensual that we need to raise financial resource to unprecedented heights.” The Amazon Fund is part of this, he added.

No one will be allowed to carry on emitting as a result of this initiative. It will be additional to emissions cuts. Otherwise we will not be able to meet the IPCC’s targets, he said.

Nicholas Stern explained that he was not representing any government but was speaking as a University Professor at the London School of Economics and Political Science. Nevertheless, he was very diplomatic. He said we should celebrate the leadership of Brazil in showing a path on clean technology. On biofuels he said that if you are clearheaded in policy, you can change technology quickly. “We can say a lot about biofuels,” he added and promptly changed the subject.

He noted that Brazil has recently discovered oil. “In developing those assets, you need to keep your commitment to a low carbon economy,” he said and talked about carbon capture and storage through biomass which removes CO2 from the air. “This is another area that Brazil can lead the world,” he said.

Low carbon growth is not only possible, he said, it is inevitable. It is the only way of growth. He spoke about the danger of not addressing climate change. With an increase in global temperatures of 3°C, the Amazon would collapse.

He talked about the obligation of the world to support the Amazon Fund and similar initiatives. “We will all benefit,” he said. The two greatest challenges of the 21st century are poverty and climate change. They have to be handled together. Northeast Brazil is one of the poorest parts of the world. This is a story about development and of deforestation, he said.

Eric Solheim, Norway’s Minister of Environment and of International Development, told us that this scheme is of enormous importance, adding that the planned reduction of emissions in the Amazon is 10 times all of Norwegian emissions.

Norway is currently entering into an agreement to provide US$100 million a year to the Amazon Fund. Solheim explained that Brazil is the biggest forest country in the world and Brazil is a global leader. The money from Norway will be “results based, transparent and independently monitored”.

Before the climate conference in 2009 in Copenhagen, we hope to have experience on reducing deforestation from three continents, Solheim said. This should mean that more money will be available.

“We are on a plane leaking fuel,” Carlos Minc, Brazil’s Environment Minister, said. “Those who made the smallest holes can’t go on saying that other holes are bigger. We have decided to do our part.” Reducing emissions by 4.8 billion tons is more than all the developed countries promised in Kyoto – which in any case they will not meet.

Minc promised that “We will not occupy one hectare of forest for ethanol nor take away one hectare from food production. This will be green ethanol.”

Brazil has doubled its monitoring efforts of illegal logging, Minc said. “If we discover a wood plant operating illegally, we close it down within one hour. But we can’t protect jobs within one hour. So we need continued funding,” he said.

Minc spoke about the need for a pulbic fund for reducing emissions in developing countries. This does not mean that developed countries don’t have to meet their targets, he added. Reductions in deforestation funded through the Amazon Fund will be additional and all projects funded will respect the full rights of Indigenous Peoples and local people. He talked about guaranteeing the maintenance of biodiversity. We have a plan, goals and the Amazon Fund.

When the presentations were finished, a Greenpeace representative congratulated Brazil. We should celebrate the launch of the fund he said. The targets could be a little faster, but Greenpeace welcomed the fact that the plan will be additional. The plan will not allow carbon credits and will not allow offsets.

Minc responded by asking us to recognise the progress made in Brazil. “I invite everybody, scientists and environmentalists to make an evaluation of the work. It is not a finished work.”

WWF has criticised the Amazon Fund, describing it as “short on ambition and detail” and both Greenpeace and WWF point out that even if the fund were to meet its target, it would still result in the deforestation of more than 5,000 square kilometres per year.

There are other serious concerns and questions about the plans:

1. Brazil continues extracting oil and looking for new oil fields. While the government is keen not to create carbon credits for the North through avoided deforestation, will the government trade off emissions from oil against the emissions saved by reducing the rate of deforestation?

2. The Juma Reserve RED Project in Brazil aims to reduce deforestation and to produce carbon credits for sale internationally. How does this comply with the government’s plans not to create carbon credits to rights to emissions? Is the government planning a two-tier approach under which private companies can set up forest conservation projects which generate carbon credits but the government cannot?

3. As Nicholas Stern pointed out, much can be said about biofuels, although he chose not to say much himself. There are plans for vast increases in the area of biofuel crops in Brazil. Are these plans really compatible with attempts to reduce deforestation? Another issue is the appalling labour conditions in sugar plantations, which currently cover six million hectares in Brazil. “The working conditions are atrocious, the wages derisory, their children are starving,” says human rights activist Pater Tiago about the problems in north-east Brazil.

4. Is the government really serious about addressing the causes of deforestation? The National Plan on Climate Change gives a figure of 34,460 MW to be generated from new hydropower dams to be built between 2007 and 2016, meaning more forest flooded and more greenhouse gas emissions, more evictions and more rivers destroyed. Will the government scrap plans for new roads through the Amazon? Will it abolish subsidies to the pulp and paper industry? BNDES, the bank in charge of the Amazon Fund, has a record of financing socially and environmentally destructive projects.

5. The Brazilian government continues to promote industrial tree plantations. The government talks about “net deforestation” and eliminating “net loss” of forest. The National Plan on Climate Change includes a proposal to double the area of plantations in Brazil, an increase of 5.5 million hectares. Of this, 3.5 million hectares will be monocultures. And the government is pushing for the inclusion of “forests in exhaustion” in the Clean Development Mechanism. This is of particular concern, given the fact that the UN definition of forests fails to differentiate between forests and plantations – a loophole that the UN so far refuses to address.

6. No one at the side event in Poznan spoke about land rights. Yet Brazil has the largest movement for land rights in the world – a direct result of having one of the least equitable land ownership patterns anywhere in the world. It is a crucial issue in terms of poverty reduction, food sovereignty and addressing deforestation.

http://www.bnamericas.com/news/banking/CEF,_World_Bank_ink_carbon_credit_markets_partnership

CEF, World Bank ink carbon credit markets partnership - Brazil

Published: Wednesday, December 16, 2009 15:54 (GMT -0400)More news from Brazil

By Business News Americas staff reporters

Brazilian federal savings bank Caixa Econômica Federal (CEF) and the World Bank have signed a partnership arrangement on carbon credits, CEF said in a...

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Brazil : Brazil to get $16 bln annually in carbon credits from UN-REDD.

Ads by Google Tours of Brazil We sell online so you save Australian Companywww.chimuadventures.comcarbon credits Scheme Help Offset carbon Emissions & Reduce Australian Soil Salinity. www.CarbonConscious.com.auBiofuels Market ForecastEthanol, Cellulosic, Algae Biofuels capacity, production, costs, priceswww.gtmresearch.com/

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Byline: Mamta03

The inclusion of UN Reducing Emissions from Deforestation deforestation

Process of clearing forests. Rates of deforestation are particularly high in the tropics, where the poor quality of the soil has led to the practice of routine clear-cutting to make new soil available for agricultural use. ..... Click the link for more information. and Degradation (REDD redd 1  tr.v. redd·ed or redd, redd·ing, redds Chiefly PennsylvaniaTo clear: redd the dinner table. ) programme in anew agreement to extend or replace the Kyoto Protocol Kyoto Protocol: see global warming. ..... Click the link for more information. could generate between 8 billion and 16 billion U.S. dollars annually in carbon credits for Brazil, the Brazilian Association of Carbon Market (Abemc) said on Monday.

Currently, the UN-REDD is not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered.  by the Kyoto Protocol, which recognizes only the carbon credits for the recovery of lost areas or reforestation Reforestation

The reestablishment of forest cover either naturally or artificially. Given enough time, natural regeneration will usually occur in areas where temperatures and rainfall are adequate and when grazing and wildfires are not too frequent.  in areas where there were no forests.

Ads by Google Caltex Bio Fuels See Which Cars Are Ethanol Bio Fuel Compatibile & Find A Caltex Stationwww.caltex.com.au/biofuelsBrazil Invests Millions get millions in Brazil Tax credits Set-up your Brasilian company www.brazilasset.com

The UN-REDD is a positive incentive mechanism for financing actions to reduce deforestation and forest degradation resulting in the preservation of native forests and reducing emissions of greenhouse gases.

Abemc President Flavio Gazania n. 1. any plant of the genus Gazania valued for their showy daisy flowers.

Noun 1. gazania - any plant of the genus Gazania valued for their showy daisy flowersflower - a plant cultivated for its blooms or blossoms  Rufino said the Brazilian government, which had rejected the inclusion of the UN-REDD in the Kyoto negotiations, recently changed its position and prepared to recognize the mechanism at the 15th UN Climate Change Convention in Copenhagen, Denmark, in December.

To Abemc, mechanisms for reducing emissions should be aimed at the maintenance of standing forests as well as being associated with the sustainable exploitation of forests.

Forests, especially tropical ones, play a key role in the global carbon cycle because they are both sources and absorbers of atmospheric carbon. Currently, deforestation of tropical forests contributes to approximately 25 percent of annual global carbon emissions.

The Brazilian government announced it will take to the Copenhagen climate change convention the proposal to reduce 80 percent the Amazon deforestation until 2020 as a contribution to overall efforts to protect the environment.

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Clearing the air on carbon credits

Mark Schapiro of the Center for Investigative Reporting talks with Kai Ryssdal about an article he wrote for Harper's Magazine, which discusses how we can measure a credit of carbon.

Mark Schapiro (centerforinvestigativereporting.org)

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TEXT OF INTERVIEW

Kai Ryssdal: The price of a ton of carbon lost some ground in the European carbon markets today. They actually have a climate exchange over there, where companies can buy and sell the right to pollute, in essence. Europe has what is called a cap-and-trade system. Greenhouse gas emissions are capped, that is limited, and then those pollution credits become a tradeable commodity, between industries that need 'em and companies that have pollution to spare. Cap and trade is one of the big linchpins of climate policy, using the market to control the amount of carbon in the atmosphere. But, of course, the reality is not even remotely so simple.

In this month's Harpers Magazine, Mark Schapiro spent some time trying to figure out how you verify those carbon credits. Mark, welcome to the program.

Mark Schapiro: Good to be here.

Ryssdal: The cap and trade regime has two purposes. One is actually functioning as a market. The other side of the coin, though, is the questionable part. Whether or not it actually does really reduce carbon emissions.

SCHAPIRO: Yes, let me give you an example. If a major German utility, which monitors the emissions at every one of their utilities all around Germany, and every month that company knows exactly how much over their emission cap they're going; and so whenever they reach that cap they know they have to go buy five million tons, 10 million tons, 50 million tons, 100 million tons of these things called credits.

Ryssdal: And when they need those credits they go to Brazil or some other developing economy where some entrepreneur has set up a system whereby he can promise reductions in emissions, yes?

SCHAPIRO: Yes, so that utility can then look to a developing country like Brazil, or China, or India to find a project where a developer is saying all right, I would have been emitting X amount of methane, for example. But I'm going to put in a little machine that's going to capture the methane from the landfill and therefore I'm going to reduce my emissions by X percent.

Ryssdal: He gets the credits for it, and then he sells that to the German utility and everybody is happy, yes?

SCHAPIRO: Exactly.

Ryssdal: OK, so here is what has always stumped me about a possible cap-and-trade market mechanism. It's not like you're buying and selling a pound of pork bellies here. You have this amorphous thing, this unit of carbon, it's a unit of air, as your piece talks about it. And you explain in your piece that the United Nations has set up a verification mechanism. Tell us about that.

SCHAPIRO: Yeah, my piece explores who are the people that are doing these measurements. And how reliable are these measurements? They are like the carbon accountants, they are the ratings agencies that we saw in Wall Street that assess the value of publicly-traded companies. Well, the same kind of process occurs with carbon. And what's happened, for example, is two of the biggest of those ratings agencies were actually suspended by the United Nations because of what the United Nations determined was inadequate oversight of the audits that they had conducted and inadequate technical skill levels of the people who work for them.

Ryssdal: Where does this leave us then? With the United States possibly getting into this market, and yet the underlying premise of measuring the carbon credits not being entirely reliable. I mean what happens next? I mean, this was the thing that was going to save the planet, right?

SCHAPIRO: This was the thing that was going to save the planet. The cap-and-trade system was largely designed by the United States as a way to detour around this idea of a carbon tax. So now the rest of the world was left to execute this plan, of course, when the United States left Kyoto in 2001. Now we're about to jump in. Where this leaves us is a very serious debate over how you're going to oversee this market. For example, is it going to be the Securities Exchange Commission, the Commodity Futures Trading Commission, the people who regulate utilities? And how much regulation is there going to be to ensure that the emissions that are promised are actually delivered?

Ryssdal: Mark Schapiro. He's a senior correspondent at the Center for Investigative Reporting. His piece in Harper's Magazine this month about carbon trade, and cap and trade and all that, is called "Cunning the Climate." Mark, thanks a lot.

SCHAPIRO: Thank you.

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Comments

Comment | Refresh By Jonathan Teller-Elsberg

From Norwich, VT, 01/21/2010

It's important to distinguish between "cap-and-trade" and "cap-plus-offset-and-trade." Europe allows for offsets. These are what undermine and make a joke of cap-and-trade. A true cap-and-trade system that disallows offset credits would not run into the problems Schapiro describes. Can a real plan like that get through Congress? I'm doubtful but it is possible: see the Cantwell & Collins' CLEAR Act, which forbids offsets. It should become law. http://cantwell.senate.gov/issues/CLEARAct.cfm

http://www.oxan.com/display.aspx?ItemID=DB124623

BRAZIL: Competitive edge for carbon credits marketFriday, March 3 2006Login to read the item in full.

Relevant Country Data: Brazil |

New to Oxford Analytica's analysis? See What is this article? to learn more.

SUBJECT: Brazil's pioneering role in carbon credits trading in Latin America.

SIGNIFICANCE: Brazil is in a key position in the developing world to win financial incentives for caring for its environment. It can also play an important role in the global climate control debate.

Word Count (approx): 1082

Headings Brazil takes the lead Price advantage CDM projects Overcoming bureaucracy

Primary Keywords: LA/C, Brazil, economy, industry, international relations, politics, social, bonds, corporate, environment, legislation, pollution, regulation

Secondary Keywords: EU, United Nations

What is this article?

This article is from Oxford Analytica's Daily Brief Services, which analyse geopolitical, economic, social, business and industrial developments on a global and regional basis, providing clients with timely, authoritative analysis every business day of the year. An extensive and unique commissioning and editing process produced this article, ensuring it is of the maximum use to our clients. Unlike most of our competitors, the typical contributor is a senior academic with more than 10 years' experience of their field. The typical article is around 1200 words long. Find out more about the Oxford Analytica Daily Brief Services, or request a trial.

Thunderbird Case #: A02-09-0007

Fields: General management, business ethics

Author(s): John Zerio and Marco Conejero

Abstract: Plantar S.A. is a pig iron producer based in Brazil working toward an integrated supply chain producing 100% green pig iron. The company is gradually converting the coke fed into the blast furnaces from fossil to green (i.e., coal produced from renewable biomass). The company owns large eucalyptus plantations in Brazil, and was the first in Brazil to obtain the approval to trade Kyoto Protocol carbon credits.

At the time of the case, both internationally and locally, the process and the technical methodologies were yet insufficiently defined. The World Bank saw Plantar as an opportunity to consolidate the process and showcase the Kyoto Protocol.

The Plantar project was a success from a strictly financial viewpoint. In addition, it put the organization on the path of significant transformation, and new growth opportunities.

Teaching:The case takes the experience of Plantar S.A., the first company to obtain the Kyoto Protocol certification in Brazil, as a springboard to review the approval process, study the carbon credit transaction mechanisms, understand the contribution of the World Bank, and discuss the commitment to sustainability in business strategy.

The case was designed for a capstone course, either undergraduate or graduate, on general management, corporate strategy, or corporate social responsibility. The case is also appropriate for courses in the area of environmental studies, or sustainable development. Its central goal and possibly greatest value is in offering a bridge of understanding between business strategy and environmental ethics.

Industry:Forestry and steel

Setting:Brazil 2008

Length:18 pages

Source:Field case

Published:August 2009

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