Regulated carbon market advances in Brazil with public consultation on SBCE sectoral coverage

The Ministry of Finance has opened a public consultation to define the initial sectoral scope of the Brazilian Emissions Trading System (SBCE), the regulatory framework that will structure the country's regulated carbon market. The proposal outlines a phased approach for economic sectors to begin complying with obligations for the Monitoring, Reporting, and Verification (MRV) of greenhouse gas emissions—a step considered essential for building a reliable system to account for national emissions. The consultation will remain open until August 28, 2026, representing a major institutional milestone in Brazil's decarbonization agenda and its transition to a low-carbon economy.

Phased implementation strengthens regulatory certainty and prepares the economy for carbon pricing

The proposal presented by the Ministry of Finance envisions implementation in three phases, allowing various economic segments to progressively adapt to the new regulatory requirements. The first stage, scheduled to begin in 2027, will cover emissions-intensive sectors such as pulp and paper, integrated steelmaking, cement, primary aluminum, oil and gas exploration and production, oil refining, and air transport. By 2029, the second phase will incorporate activities such as mining, the electric power sector, the chemical industry, food and beverages, glass, ceramics, solid waste management, and sewage treatment. The third stage, expected to start by 2031, will include road, rail, and waterborne transport sectors, significantly expanding the reach of the national emissions monitoring system.

At this initial stage, the adoption of MRV obligations does not mean that companies will be immediately subject to emission limits or the requirement to purchase carbon allowances. The initial objective is to create an official, standardized, and technically consistent emissions data baseline. This will serve as the foundation for future stages of the SBCE’s implementation, including the definition of emissions caps, allocation rules for Brazilian Emissions Quotas (CBEs), and criteria for the use of Verified Emissions Reduction or Removal Certificates (CRVEs). The initiative reinforces Brazil's commitment to establishing a regulated carbon market aligned with international best practices, thereby providing greater regulatory predictability, strengthening the competitiveness of domestic industry, and creating conditions to expand investments in innovation, energy efficiency, and decarbonization technologies.