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The regulation of Law No. 15,042, which established the Brazilian Emissions Trading System (SBCE), marks a new cycle in the Brazilian carbon market and expands opportunities for the country (and agribusiness) to be part of the solution to global climate challenges. This new cycle is just beginning, with expectations of consolidation within a minimum period of five years, based on the history of more advanced markets internationally.
A new cycle in a decades-long story
The carbon market is not new. It has existed since 1990, gaining greater consolidation from 2015 onward. In 2023, according to the State of the Voluntary Carbon Markets (SOCVCM), one of the most respected and traditional reports on the voluntary carbon market worldwide, US$723 million were transacted. In Brazil, however, it enters a new cycle, marked by the law that forms the basis of the country’s regulated carbon market.
The new legislation sets guidelines to limit greenhouse gas emissions in specific sectors of the economy and creates the mechanism of Brazilian Emission Authorizations (ABEs), which are tradable permits for companies to meet their reduction targets.
Implementation of the system now depends on a process of technical regulation, led by the Ministry of Environment and Climate Change (MMA). A first step has already been taken with the creation of the SBCE management body, the Extraordinary Secretariat for the Carbon Market (SEMC), linked to the Ministry of Finance, established by Decree No. 12,677 of October 15, 2025.
Planned next acts include defining the sectors that will be part of the system and their respective sectoral emissions caps, creating the regulatory authority responsible for oversight, standardizing quantification metrics, detailing MRV (monitoring, reporting and verification) rules, structuring the primary and secondary markets for ABEs and, finally, guidelines for integration with the voluntary market.
Who will be regulated?
The law stipulates that all companies or facilities that emit above an annual emissions threshold, to be defined in the regulation, will be mandatorily included in the SBCE. These companies will have reduction targets and will need to deliver, year after year, the ABEs required to demonstrate compliance.
So-called on-farm agriculture, that is, within the boundaries of the farm, was excluded from this obligation—a decision that recognizes the huge heterogeneity of Brazilian rural properties and the risk of imposing disproportionate regulatory costs on small and medium producers. This does not mean, however, that agribusiness is outside the system: the entire upstream chain (which supplies inputs and services to primary production) and downstream chain (which includes post-production stages) can be regulated, as they concentrate emissions that are more standardizable and monitorable.
Thus, while slaughterhouses, for example, may be subject to mandatory targets, which could result in the need to purchase credits for compliance, the rural producer can sell credits generated from sustainable practices, especially those that remove carbon from the soil or reduce emissions across the production system.
This is the essential counterpoint: the cattle rancher is outside the legal obligations but at the center of economic opportunities, as highlighted by Marta Giannichi, global sustainability director at Minerva Foods and MyCarbon, during the Summit Agenda SP+Verde, held by the Government of São Paulo, the City of São Paulo and the University of São Paulo (USP). “When we look at the emissions profile of several sectors, such as agribusiness, we see that much of it is in scope 3, that is, in the value chain. In our case, it is essential to engage cattle ranchers in lower-emission and higher-carbon-sequestration practices, because this reduces the carbon footprint and can also generate income for the producer.”
Helping producers in this process is one of the objectives of the Renove program, created by Minerva Foods and also the vision guiding MyCarbon’s work. One of the company’s initiatives, highlighted by the executive during the event, is developed in partnership with the verifier VERRA – VCS. This is done through the methodology that encourages increased agricultural production while promoting carbon sequestration in the soil. In this way, the agricultural chain becomes transversal, contributing to food security, climate change mitigation, the generation of sustainable assets on farms and adjustments to regulatory plans across the country’s various sustainability arenas.
From this process, which can last up to 10 years, it is possible to generate two types of carbon credits – removal credits (when carbon is sequestered in the soil) or reduction credits (when the impact of the production system is reduced).
That allows the rural producer to benefit both from increased productive efficiency, more in the short term, with an impact on greater competitiveness as they become able to meet an increasingly demanding global market, and from the commercialization of credits in the longer term. “The environmental agenda is becoming a global trade barrier. Markets such as Europe already require traceability and decarbonization commitments. Being prepared today is guaranteeing access tomorrow,” the executive added.
Removal credits and reduction credits: how they work
Carbon Removal Credits are generated when CO₂ is effectively removed from the atmosphere, with measurable and additional storage. Examples include the accumulation of carbon in soil through sustainable management, reforestation and natural regeneration, increased root biomass and direct air capture (DAC) technologies.
They are crucial to neutralize residual emissions — a central concept for Net Zero, according to the Science Based Targets initiative (SBTi) and the Intergovernmental Panel on Climate Change (IPCC).
Reduction credits (Avoided Emissions Credits), on the other hand, are generated when an activity avoids emissions that would occur in the reference scenario. Examples include increasing pasture productivity that reduces emissions per kilogram of meat; improvements in input-use efficiency; replacing fossil energy with renewables; and nutritional management that reduces enteric methane.
Both types are valid in the voluntary market, although the global scene has been progressively valuing removal credits, as they are indispensable for long-term climate balance.
As the carbon market advances, it highlights how agribusiness can be a fundamental part of the solution to global climate challenges. The producer, in turn, ceases to be viewed only through the lens of emissions and comes to be recognized as a provider of environmental services, capable of mitigating negative impacts and, more than that, generating positive environmental impacts, such as the benefits of soil carbon.
It is precisely this capacity to generate environmental benefits — while producing food — that places Brazil in a prominent global position. According to a McKinsey report, “Brazil’s role in climate change is a study in contrasts. On the one hand, the country is the sixth-largest emitter of greenhouse gases in the world, equivalent to about 3% of global emissions. On the other hand, it is likely the only country of continental size capable of becoming carbon negative, becoming indispensable for the world to reach the 1.5°C target set in the Paris Agreement.”
The document also states that emissions are concentrated in land use, land-use change and forestry, with illegal deforestation being the main emission driver. But it is also in this segment—which encompasses all activities and management practices that result in changes to carbon stocks in existing biomass and soils, as well as the release and sequestration of CO₂ to/from the atmosphere—that the most promising way to decarbonize the country lies: nature-based solutions. “Beyond carbon reduction, NbS provide a range of positive externalities for society and the environment, including biodiversity protection, water security, job creation and economic value generation,” the document emphasizes.
The Brazilian Business Council for Sustainable Development (CEBDS) estimates that, by 2030, Brazil’s potential revenue from the carbon credit market could reach US$120 billion.
At a moment of regulatory transition and growing international market demands, this could be the strategic advantage that differentiates Brazil on the world stage. Far from being a barrier, the carbon market becomes an opportunity to show that food production and environmental conservation can go hand in hand.
Sources of reference:
· AR6 Synthesis Report: Climate Change 2023
· Beyond net zero: Brazil’s massive opportunity to decarbonize the World
· How Brazil reduces GHG emissions per kilogram of meat?
· DECREE No. 12,677, OF OCTOBER 15, 2025
· State of the Voluntary Carbon Markets 2024
· Nutritional management in feedlots ensures efficiency in cattle production
· The role of Brazil in global food security
· Brazilian Emissions Trading System
· The Corporate Net-Zero Standard
· Green transition challenges small and medium cattle ranchers
· Vaccine that reduces up to 15% of enteric methane emissions is expected to reach the market between 2027 and 2030 · VM0042 Improved Agricultural Land Management, v2.2