Carbon Credits in Brazil:

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Brazil opens carbon credit market, September 15

ISN
http://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-06
Country: BRAZIL
Author: 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 IST
Updated: 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 Santos

Souza Cescon Barrieu & Flesch
São 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 target
Land-based offsets stay central to US climate bill
REDD & 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 ExchangeTwitterFacebook| 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’sBerkshire 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.netAdriana 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 development

2. Renewable electricity
3. Biofuels
4. Deforestation
5. Forest cover
 6. Vulnerability and adaption
7. 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_m
arkets_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...

Have to subscribe for the rest…

Brazil : Brazil to get $16 bln annually in carbon credits

from UN-REDD.

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Link to this page
<a
href="http://w w w .thefreelibrary.com/Brazil+:+Brazil+
: Brazil to get $16 bln annually in carbon credits from
UN-REDD.</a>

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 Pennsylvania
To 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.

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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
flowers
flower - 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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Wednesday, January 20, 2010

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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)

More on Sustainability, Copenhagen

• Listen to this Story

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.

 • « Previous Story
• Next Story »

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 market

Friday, March 3 2006
Login 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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