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The Brazilian government is considering an emissions cap and protection for indigenous communities involved in carbon offsetting as part of a new carbon market, Rafael Dubeux, a senior coordinator of the country’s energy transition plan, told Reuters in an interview.
Brazilian President Luiz Inacio Lula da Silva and his administration are looking to accelerate an “ecological and energy transformation” after Lula’s predecessor, former president Jair Bolsonaro, presided over record deforestation in the Amazon.
Now the new administration has submitted legislation to Brazil’s Congress, which is expected to discuss this month the creation of a new regulated carbon market with emission caps for companies. Those caps will hit the oil and gas producers, including state oil giant Petrobras.
Steel, cement, aluminum, and meat processors and producers will also be hit by the cap in the new carbon market, Dubeux told Reuters. The cap would be for company emissions for firms that emit more than 25,000 tons of carbon dioxide equivalent (CO2e) annually.
The companies that will be affected by the emissions cap represent just 0.1% of all Brazilian firms, but they emit almost half of the country’s emissions, Dubeux added.
The new carbon market, if approved by Brazil’s Congress, will not take effect immediately. There would be two years of monitoring of emissions before the cap and emissions credits market officially come into effect.
Despite the efforts to accelerate emissions reductions, the Brazilian administration has signaled that there isn’t a discrepancy in Brazil’s efforts to advance the energy transition and its state oil company Petrobras pursuing drilling in domestic frontier areas.
“There is no contradiction. You indicate where you want to get and then you'll need resources for that,” Lula’s chief of staff Rui Costa said in a radio interview this week carried by Reuters.
“We are going to build a sustainable, renewable energy matrix, but it's obvious that we need to fund that transition process,” Costa added.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com