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Carbon Credits in Brazil

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carbon trading in Brazil

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Carbon Credits in Brazil:Google search: carbon credits in Brazil Brazil opens carbon credit market, September 15 ISN The Brazilian Development Ministry on Wednesday announced the launch of the regions 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, Jos 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 Rios 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 its 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 Brazils Getulio Vargas Foundation consulting firm, which is an organizer of Wednesdays 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.

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 Arabias motivation is obvious. It wants to continue extracting and selling oil. But what is Brazils 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 CDMs 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 Id 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 Im 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, Brazils 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, Brazils 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 Brazils 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. WRMs 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 wit