With the goal of reducing the impact of global climate change, international governmental and non-governmental agencies worldwide have developed numerous creative alternatives. Although the ideas vary, the purpose is the same: to reduce the alarming impact of climate change.
In the 90s, one of the ideas that emerged from the Kyoto Protocol, an international agreement, was that developed countries should reduce emissions of GHG (greenhouse gas) emissions by an average of 5.2% compared to levels measured in 1990.
To achieve this goal, some specific standards were defined. One of the standards is that a country can emit into the atmosphere only a certain predefined amount of carbon dioxide (CO2). If a country does not reach its limit, it can commercialize the unused quantity as carbon credits. If the country has an industrial activity so polluting that it exceeds its CO2 emissions limit, it can buy credits from those who pollute less.
The limitation on the emission of GHG led to the emergence of a new market, the sale of carbon credits. The initiative seems to be bringing results. It may not be enough, but it is a good start to improving the global climate. The Emissions Trading Schemes (ETS) have been an important element in helping to minimize climate change. So too have agencies such as the International Carbon Action Partnership (ICAP), which even created a map that shows how certain countries are using cap-and-trade systems to combat climate change.
Brazil is a country that in recent years has excelled at combating pollution. Brazil managed to develop one of the cleanest energy matrixes in the world thanks to its technological developments in the bio-fuel sector as well as its use of hydroelectric power.
In addition, Brazil has been one of the most active developing countries in the global carbon credit market, developing hundreds of projects, including many developed by BMF&BOVESPA S.A., the Brazilian stock market. Among Latin American countries, Brazil remains dominant with the bulk of the sale of carbon credits.
The carbon credit market is no longer an idea but rather a reality. As mentioned in the World Bank study titled Strengthening of the Brazilian Carbon Market’s Institutions and Infrastructure, “It has contributed to the implementation of projects that aim to reduce GHG emissions in many different sectors and it has turned GHG, represented by carbon, into economic assets that are no longer mere environmental liabilities.”
