Carbon market: learn more about it!

Carbon credits generally represent mechanisms that aim to reduce greenhouse gases (GHG) and other gases that can trigger various environmental problems directly related to climate change. According to an article produced by the Amazon Environmental Research Institute (IPAM), one of the first events was the United Nations Framework Convention on Climate Change, a United Nations conference to deal with the environment and development, which brought together more from 180 countries in 1992. Therefore, these credits are important for maintaining the balance of carbon emissions and combating climate change.

In this scenario, the carbon market is promising and has been discussed more frequently at world events, such as the Climate Conference – which takes place annually. This sector can boost the growth of Brazil, for example, which is capable of generating 15% of the global potential for new carbon credits, through natural activities, according to a McKinsey study.

Do you want to know more about the importance of the carbon market for preserving the environment? Then we invite you to read this article produced by us, from the INFLOR Blog. Check out!

See more – ESG: 5 tips to adapt to the market

What is the carbon market?

Also known as the carbon credit market, this sector seeks to offset carbon emissions – one of the main greenhouse gases (GHG) – through the acquisition of credit. In addition to contributing to the environment, the carbon market stimulates the world economy, as shown in a study carried out by WayCarbon. By 2050, this market could generate more than 8 million jobs and generate amounts between US$493 million and US$100 billion, according to research, across the planet.

However, to grow even further, society must be engaged with the cause. The community’s social participation corresponds to the criteria of another pillar of ESG (in addition to the environmental one) and, in this way, promotes rapprochement between it and the corporate market. This partnership can provide the creation of promising projects – especially aimed at the carbon market.

What is the Brazilian potential in this market?

Also according to the WayCarbon study, which was presented at the Frontiers and Trends (Frontend) event last year, Brazil has the capacity to meet 5% to 37.5% of the global demand in the voluntary carbon market. In relation to the regulated carbon market, the expectation is that the potential is between 2% and 22%. Both research estimates are forecast until 2030.

The monetization of the reduction of these emissions represents an important marketing item, and in Brazil, it is established by Decree No. 11075 of 2022, which establishes the procedures for preparing Sector Plans, and establishes the National GHG Emissions Reduction System.

The carbon credit is like a monetary security, and represents a ton of carbon that was not emitted, so it is already an advantage. Furthermore, in terms of finance, it is also important, as the sale of carbon credits on the market contributes to additional revenue for companies, which contributes to the competitive advantage and the economic possibilities of future sustainable projects. Check out other advantages promoted by carbon credit:

• Socio-environmental commitment;
• Industrial financial gains in the country;
• Assistance to other countries that are not able to reduce carbon credits.

And how can society collaborate on carbon market projects?

If the country continues to release high levels of GHG into the atmosphere through actions such as deforestation, emissions of these gases could increase by up to 137% by 2030, as indicated by a study by the Alberto Luiz Coimbra Institute for Postgraduate Studies and Research. Engineering (Coppe) at the Federal University of Rio de Janeiro (UFRJ).

This estimate goes against the international commitment that Brazil made, through the Paris Agreement, in 2015, to reduce its carbon footprint by 2030 by around 50%. And, given this scenario, social engagement is essential for projects that contribute to the growth of the carbon market.

How is it possible to generate carbon credits?

According to data from consultancy carried out by McKensey&Company, Brazil concentrates around 15% of the global potential for carbon capture by natural means. The research also indicates that Brazil has the possibility of meeting up to 48.7% of the demand for carbon credits. In this way, one can consider the different existing ways of generating carbon credits, for example:

• Replace the use of fuel in factories;
• Carry out the appropriate disposal of solid waste Restore forests/biomes;
• Practice reducing deforestation.

INFLOR: a partnership between the business sector and the forest

We, at INFLOR, are committed to contributing to a greener world. Therefore, we help companies that manage forests to make their processes more efficient and, thus, collaborate with the chain in calculating emissions, decarbonization projects and carbon credits.

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