Nature’s power against climate change

 

Dear friends, partners, and clients,

 

As we wrap up another year of hard work, we want to share with you our joy and pride for everything we have achieved together. 2023 represented a unique moment to rethink key aspects of the voluntary carbon market, in which there was a true “separation of the wheat from the chaff” aimed at consolidating carbon projects with high socio-environmental integrity.

Resilience was the keyword for this year, but also represented a window of opportunity so that we can begin 2024 stronger and continue to join forces to improve the integrity, quality, trust and scale of Nature–Based Solutions. 

 

In Brazil, the three branches of government joined forces to strengthen the fight against climate change, and we have never been so close to establishing a Brazilian Emissions Trading System (ETS)

 

At the Legislative level, our Chamber of Deputies approved Bill No. 2,148/2015, which creates a Brazilian ETS. The advancement of this bill is a remarkable achievement for the decarbonization of the country’s economy and strengthens the voluntary market, as there will be interoperability between the two mechanisms. We have developed an analysis on the topic, which can be accessed through this link.

Law No. 14,590/2023 was also sanctioned. It corrects a historic obstacle in the national legislation on Forestry Concessions, now allowing the development of carbon projects in those areas. Biofílica Ambipar has been actively working with the Ministry of the Environment and the Brazilian National Development Bank to assist in regulating the law, preparing feasibility models and scenarios aiming to substantially leverage forestry concessions in Brazil.

At the Executive level, Biofílica Ambipar obtained a seat on the National Commission for REDD+ (Conaredd+), representing the private sector. Representing this chair means receiving recognition for the technical expertise and engagement of Biofílica Ambipar in the area of ​​Nature-Based Solutions. 

 

Globally, the main entities and stakeholders of the Voluntary Carbon Market (VCM) have joined forces to improve integrity, trust, and scale, reflecting a positive perspective regarding the future of this climate financing mechanism. 

 

At COP28, which took place in Dubai, we participated in several discussions and were able to interact with our international partners. We have seen global consensus on the importance of carbon markets for decarbonization and climate change mitigation. As an example, we cite the speech of the President of the European Union, Ursula von der Leyen, about the importance of these mechanisms and their connection with the protection of Biodiversity. We also developed a bulletin with news on the VCM during COP28, which can be accessed through this link.

Additionally, in a historic announcement supported by the COP28 Presidency, the Science Based Targets Initiative (SBTi), the Voluntary Carbon Markets Initiative (VCMI), the Integrity Council for the Voluntary Market (ICVCM), GHG Protocol and the We Mean Business Coalition (WMB) announced that they will join forces to establish an integrity manual that provides scientifically based methodologies for the decarbonization of production processes and the use of voluntary carbon credits to offset residual emissions. We recommend the following video, released by the entities, explaining the urgency of financing forest conservation and restoration.

On the supply side of the VCM, we watched the world’s largest certifiers, such as Verra, American Carbon Registry (ACR), Architecture for REDD+ Transactions (ART), Climate Action Reserve, Global Carbon Council and Gold Standard, announce that they will work together to establish common principles related to quantifying, verifying and maintaining carbon emissions reductions and removals in their respective methodologies. The partnership aims to ensure that each of these certifiers is aligned with the Core Carbon Principles (CCPs), a set of parameters developed to identify high-integrity voluntary carbon credits.

 

Besides the national and international advances in the VCM, we highlight the following market milestones in 2023

 

Verra, certifier of all Biofílica Ambipar projects, published a consolidated methodology for forest conservation projects involving unplanned deforestation (REDD+ AUD). The new methodology aims to harmonize project baselines, providing a greater environmental integrity of these carbon credits.

After seven years, Ecosystem Marketplace updated its analysis of how companies that buy carbon credits work vs. those who do not use this strategy. The study, carried out with more than 7,000 companies, identified that, on average, companies that are part of the voluntary market invest three times more in emission reduction activities than companies that do not. In other words, the study combats the misunderstanding that companies that buy carbon credits do not have broad decarbonization strategies.

The involvement of companies with the voluntary carbon market in 2023 was also notable, even in a challenging year. According to data from Verra, the volume of carbon credits from forest conservation projects (REDD+) retired in 2023 exceeded the volume retired in the same period of the previous year by 70%, reaching 46 million tCO2e. Total retirements at Verra, considering all types of projects, reached the level of 104 million tons, the same volume observed in the equivalent period of 2022.

Internally, we maintained our focus on ensuring forest conservation and restoration projects of high quality and integrity. With a team of more than 70 people with a high technical level, we conducted 10 validations/verifictions, developed six new projects, consolidated intelligence in projects focused on sustainable soil management in agriculture and livestock and in Blue Carbon, and implemented new seals and co-benefits certifications. We also innovated the financing model in ecological restoration areas, through the investment of USD 60 million in the forest restoration of the Atlantic Forest Biome within the scope of the Corridors for Life ARR Project, in partnership with Astrazeneca. Finally, we are increasingly integrated into the Ambipar Group, taking advantage of all the synergy and thousands of customers around the world to provide decarbonization solutions. We could not be on a more powerful platform to achieve our mission.

All our achievements were only possible due to the support and trust of our customers and partners, who believe in the need to significantly increase financing for forest conservation and the reforestation and restoration of degraded areas in Brazil. 

 

In 2024, keep counting on Biofílica Ambipar for a more sustainable future. 

On behalf of our entire team, I wish you an extraordinary and prosperous 2024.
With kind regards


Plínio Ribeiro
Co-founder and CEO of Biofílica Ambipar

 

 

Approval of the bill for a Brazilian ETS in the Chamber of Deputies is a remarkable achievement

 

🌳 IN A REMARKABLE ACHIEVEMENT, THE BRAZILIAN CHAMBER OF DEPUTIES APPROVED A BILL TO ESTABLISH A NATIONAL ETS.

 

In a year marked by the worsening of the global climate crisis, in which we experienced extreme temperatures, droughts in unprecedented places and tragic floods, yesterday, Brazil experienced a historic moment within its Chamber of Deputies when the deputies approved a bill proposal to establish an emissions trading system (ETS) for the country. There were 299 votes in favor of the 404 parliamentarians present. This means that 73.76% of the deputies voted in favor of this major step for the decarbonization of its industries.

Since the sanction of the National Climate Change Policy in 2009, there has been a legal provision in Brazil for the creation of a regulated carbon market. It’s been a long 14 years of waiting, a period in which we missed great opportunities to position ourselves at the forefront of the world as a leading country in creating innovative solutions that drive economic growth in a sustainable manner. It’s worth remembering that, in 2009, the European ETS, the first regulated market of its kind in the world, was only 3 years old and was still in its infancy. Today it trades more than 754 billion Euros in its primary and secondary markets, generating € 42 billion annually of taxes for the bloc’s countries.

 

 

But why is having a regulated national carbon market so important for Brazil?

 

First, it is always important to highlight the differences between an ETS and the Voluntary Carbon Market. In an ETS, the State establishes a Greenhouse Gas (GHG) emission limit within the productive sector, enabling the eventual trading of deficits and surpluses of emissions between each other. On the other hand, the voluntary market is characterized by an environment in which people, companies and organizations neutralize their GHG emissions through purchases of carbon credits.

According to the proposed regulation, companies that emit more than 10 thousand tons of carbon dioxide equivalent – ​​CO2E1 per year will be required to establish a plan to monitor their emissions, developing a periodic report, while companies above 25 thousand tons of CO2E per year, in addition to reporting and monitoring, they will need to reconcile their emissions through emissions licenses distributed free of charge or at a cost by the government. It is estimated that there are around 5,000 companies in Brazil that emit more than 25 thousand tons of CO2E. Thus, the Brazilian Regulated Market, when implemented, will be the largest carbon market in Latin America.

Secondly, by creating an emissions license trading system, in which it is possible to transact emissions quotas between companies that have exceeded their respective GHG limits with companies that have managed to decarbonize their production processes, we enable carbon pricing to encourage the competitiveness of the Brazilian industry and its innovation.

As in Brazil more than 50% of greenhouse gas emissions are the result of deforestation, forest degradation and land use change, the proposed law is in the right way establishing interoperability between voluntary and regulated markets, through the possibility for companies to offset part of their emissions through the acquisition of Verified Emissions Reduction or Removal Certificates – CRVE, which will be voluntary carbon credits converted for commercialization in the regulated market, after the definition, by the Brazilian State, of which certification bodies and methodologies currently available will be capable of acceptance in this new market.

 

 

Other advances in the Brazilian voluntary carbon market in the proposal approved by the Chamber of Deputies:

 

  • Legal certainty on points such as the ownership of credits, in which it was defined that, while the current status for voluntary carbon credit remains, when a carbon credit is transformed into a CRVE, it will be interpreted as a “market asset”)
  • Free initiative (including at a state level) in the development of carbon projects
  • Rules that prevent double counting of credits and increase the socio-environmental integrity of projects
  • Update of tax legislation regarding credits
  • Freedom for states to implement their own jurisdictional programs (under the responsibility of the public authorities) for carbon generation, while at the same time there is also the guarantee of the possibility for private properties to exercise their property rights by requesting the exclusion of their respective areas from such programs
  • Environmentally appropriate waste disposal and recycling projects can generate carbon credits
  • Guaranteeing appropriate benefit sharing for traditional communities and indigenous peoples, in which ARR initiatives will allocate to those communities at least 40% of the carbon credits generated, while REDD+ projects will allocate a minimum of 60%
  • Guarantee that those settled in agrarian reform projects have the same rights and duties as indigenous peoples and traditional communities

 

New additions to the emissions trading system included:

 

  • An allocation of 85% of the resources raised by the regulated market to finance scientific research and technological development activities with the aim of promoting the decarbonization of productive activities
  • Entry of motor vehicles as a source of regulated emissions
  • Environmentally appropriate waste treatment and final disposal units will be considered based on their transversal potential for mitigating greenhouse gas emissions and will not be subject to the emission limits set out in the law when they are proven to adopt systems and technologies to neutralize such emissions.
  • Double appeal level for possible application of fines for non-compliance with emissions reconciliation.

 

 

Lastly, it is important to note that there are still several steps necessary to implement a Brazilian ETS. The proposal will now be sent back to the Federal Senate, which has already approved material that was used as the basis for the bill approved by the Chamber of Deputies. This should speed up the legislative process, but as highlighted, the bill has suffered several modifications that need to be discussed. Finally, if the bill is sanctioned, the proposed timeline of implementation is five years.

Biofílica Ambipar Environment will continue to share our technical expertise with the Brazilian parliament, the Federal government, civil society and, principally, our clients, to engage in their business decarbonization.

 

 

 

[1] CO2E is a metric measure used to compare emissions of various greenhouse gases based on global warming potential relative to carbon dioxide (CO2). For example, the global warming potential of methane gas is 21 times greater than the potential of carbon dioxide (CO2). So, we say that the CO2 equivalent of methane is equal to 21.

COP28 and the Voluntary Carbon Market

 

At COP28 in Dubai, the main entities and stakeholders of the voluntary Carbon Market (VCM) have joined forces to improve integrity, trust and scale, reflecting a very positive perspective regarding the future of this climate financing mechanism.

On the supply side, it has been announced that several stardards are going to work together in order to adhere their methodologies to the Core Carbon Principles (CCPs), a set of parameters defined by the Integrity Council for the Voluntary Carbon Market – ICVCM to qualify carbon credits as of high quality and integrity.

On the other hand, some of the most important entities alongside the demand for carbon credits like Science Based Targets Iniciative – SBTi, the Voluntary Carbon Markets Iniciative – VCMI, GHG Protocol and We Mean Business Coalition came together to develop an end-to-end, science based integration in the decarbonization guidance that will help companies to decarbonize their production processes and use carbon credits to offset their residual emissions.

The urgency of climate action is evident and VCM is one of the most cost-effective tools to accelerate global decarbonization. Below we present you a summary of the main announcements at this COP:

 

VCMI, SBTi, ICVCM, WMB and GHG Protocol come together to promote VCM as climate action tool

In a historic announcement and with the support of the COP28 board, the Science Based Targets Initiative – SBTi, the Voluntary Carbon Markets Initiative – VCMI, the Integrity Council for the Voluntary Market – ICVCM, GHG Protocol and the We Mean Business Coalition – WMB informed that they will join forces to establish an integrity guidance that provides scientifically based methodologies for the decarbonization of production processes and the use of voluntary carbon credits to offset residual carbon emissions.

 

 

World’s biggest stardards announce colaboration to increase the positive impact of Carbon Markets

Verra, American Carbon Registry – ACR, Architecture for REDD+ Transactions – ART, Climate Action Reserve, Global Carbon Council and Gold Standard announced that they will work together to create common principles related to the quantification, verification and permanence of reductions and removals of carbon emissions in their respective methodologies. The partnership aims to ensure that the methodologies of each of these certifiers adhere to the Core Carbon Principles – CCPs – a set of parameters developed by the Integrity Council for the Voluntary Carbon Market – ICVMC, to identify high-integrity voluntary carbon credits.

 

 

CFTC issues proposed guidance regarding the listing of Voluntary Carbon Credit Derivative Contracts 

The Commodity Futures Trading Commission – CFTC has approved a proposed guidance and request for public comment regarding the listing for trading of voluntary carbon credit derivative contracts. The proposal outlines certain factors a CFTC-regulated exchange, or designated contract market, should consider when addressing requirements of the Commodity Exchange Act (CEA) and CFTC regulations that are relevant to the contract design and listing process.

 

 

European Commission President speeches about VMC’s importance

The president of the European Commission, Ursula von der Leyen, spoke about the urgency of developing new carbon markets that adhere to the Paris Agreement, with the aim of combating climate change. In her speech, she highlighted the need for the world to advance in three objectives: helping more and more countries to create their own regulated carbon markets and that these markets really have the ambition to promote the reduction of emissions and. Furthermore, the importance of encouraging private capital to finance the voluntary carbon market, with a view to enabling the continuity of projects that protect biodiversity.

 

 

World Bank Carbon Credits to Boost International Carbon Markets

World Bank Engagement Road map for High-Integrity Carbon Markets seeks to expand transparent and inclusive carbon markets that will help developing countries in Africa, Latin America and Southeast Asia to protect their forests.

 

 

Iosco proposes suite of good practices for VCM

The International Organization of Securities Commissions – Iosco, requested public comment regarding a manual of good practices to promote the integrity of the VCM. The document seeks to provide legal support to jurisdictions that have established or may be seeking to establish national regulations for their respective voluntary carbon markets.

 

UN Climate Change Executive Secretary speech at voluntary carbon market roundtable

UNFCCC Executive Secretary Simon Stiell stated that there is an urgent need for countries to accelerate efforts to combat climate change and decarbonize their economies. In this sense, carbon markets are one of the viable tools that can be implemented now and at scale. To achieve this, it is necessary to strengthen the credibility, integrity and transparency of voluntary credits.

 

 

Climate Impact X launches new trusted carbon credits contracts

Climate Impact X, a global marketplace for trusted carbon credits announced that it is going to launch a suite of new trading venues in order to negociate carbon credits contracts adherent to the Core Carbon Principles (CCPs).

 

 

United States and Partners Announce Energy Transition Accelerator Framework

The U.S. Department of State, the Bezos Earth Fund, and The Rockefeller Foundation presented the core framework of the Energy Transition Accelerator (ETA), an innovative carbon finance platform aimed at catalyzing private capital to support ambitious just energy transition strategies in developing and emerging economies.

 

 

UNDP launches plan to boost integrity in carbon markets and increase access to finance schemes

The United Nations Development Programme (UNDP) today launched a new initiative at COP28 to support developing countries’ access to carbon markets, mitigate social and environmental risks and promote accurate carbon accounting.

 

 

Brazilian Development Bank announces new program to restore the Amazon Forrest

The National Bank for Economic and Social Development (BNDES) announced the Arco da Restauração Program, which aims to invest more than US$ 200 million in the restoration and reforestation of 60 thousand square kilometers of the Amazon Forest by 2030.

 

 

Seven UE countries propose framework to prevent greenwashing and boost integrity in voluntary carbon markets

The Netherlands, Germany, France, Spain, Finland, Belgium and Austria proposed a framework aiming at preventing greenwashing complaints against companies. Among the proposals, is the recognition of the use of carbon credits for companies’ climate action.

 

 

Institute for Global Environmental Strategies works to advance engagement in international carbon markets

The Global Institute for Environmental Strategies (IGES), through the Partnership for the Implementation of Article 6 of the Paris Agreement, announced that it will partner with the International Emissions Trading Association (IETA), aiming to implement and enhance the market mechanisms stipulated in Article 6 of the Paris Agreement.