Much is said about the climate change, your consequences and ways to mitigate them. One of the ways to combat these effects is through carbon markets. Want to know more about this mechanism? Check out the text below!
THE decarbonization is the search for the reduction (and possible elimination) of carbon emissions into the atmosphere, especially from carbon dioxide (CO2), responsible for approximately 60% of the Greenhouse Effect. It happens when there is a replacement of polluting matrices, such as the burning of fossil fuels, for more efficient technologies and renewable energies, that come from natural resources such as the sun and wind.
When we talk about decarbonization, we immediately think of carbon markets. They are one of the financial solutions that can be used to facilitate compliance with the climate goals aimed at 2030. These goals were defined in the Paris Agreement during COP 21, to prevent an increase of more than 1.5°C in the global average temperature. Each signatory country established its targets for reducing greenhouse gas (GHG) emissions, called Nationally Determined Contributions (NDCs).
A 2023 McKinsey study indicated that Brazil, for example, can reduce emissions of these gases in several sectors and at low cost, by reducing illegal deforestation, increasing the use of renewable energy sources and adopting sustainable techniques in animal management and agriculture.
These emission reductions generate carbon credits. I.e, a carbon credit is generated for every ton of carbon that is no longer emitted or is captured from the atmosphere. To achieve this, it is necessary that an activity that would generate greenhouse gas emissions be replaced by one that reduces these emissions.
In short, the carbon market It is characterized by the sale of these credits between those who hold them, having reduced their emissions, and those who need to reduce them, but have not reached the targets.
In each country, the market is regulated by legislation. In Brazil, the regulation is made by Decree No. 5,882, of 2006. And, like any other currency, the value of carbon credits varies, and can be influenced by issues economic, marketing and environmental.
There is also a difference between the markets for selling carbon credits. There are two:
- Regulated market: is a mandatory market, established by cap-and-trade regulations (which limit gas emissions through pricing) through commitments made between countries. In them, companies have a stipulated maximum emissions limit and, from that, they can buy and sell permits.
- voluntary market: is an optional market, in which companies and individuals purchase credits on their own to offset emissions.
Now that you know how carbon markets work, how about finding out what Sitawi's role is in this mechanism? Access our publication and understand how we can translate these opportunities into positive impact for people and nature!
