The creation of a regulated carbon market introduces an element that has, until now, been largely absent from Brazil: a structured source of demand for decarbonization projects. By establishing mandatory emissions targets for certain sectors, the system creates sustained demand for carbon credits and emissions-reduction initiatives, fundamentally changing the economics of activities that have historically relied primarily on voluntary markets. According to Roberto Vianna, partner in the Banking & Finance practice at Vieira Rezende, this is the defining feature of the new model. “The demand created by the system itself is likely to make viable projects that currently lack sufficient economic incentives to move forward,” he says. In Vianna’s view, this emerging market is developing in an environment characterized by ample liquidity and investors actively seeking new investment opportunities.

The implications extend well beyond the creation of a new financial asset. The predictability provided by a regulated market strengthens incentives for investments that reduce emissions within productive activities themselves, including industrial modernization, equipment replacement, improvements in energy efficiency, and the adoption of renewable energy sources. Reforestation and land restoration projects will continue to play an important role, but they will increasingly coexist with a much broader range of decarbonization initiatives. According to Vianna, the greatest potential of the regulated market lies precisely in its ability to expand the universe of economically viable projects.

This dynamic also transforms the way decarbonization projects can be financed. Brazil has the conditions to significantly increase the supply of emissions-reduction initiatives while benefiting from a market with abundant liquidity and investors looking for new opportunities. Unlike instruments such as green bonds, Green CPRs, and other sustainable finance structures, the regulated carbon market creates a permanent source of demand for decarbonization projects, reducing reliance on voluntary initiatives alone. “Carbon credits traded in the regulated market are fundamentally different from other sustainable finance instruments because demand is driven by a regulatory obligation,” says Vianna.

SBCE Timeline: From Regulation to Full Implementation

December 2024

Establishment of the SBCE
Enactment of Law No. 15,042/2024, establishing the Brazilian Emissions Trading System (SBCE) and creating the legal framework for the country’s regulated carbon market.

2025–2026

Regulatory Development
Development of the regulatory framework, establishment of governance structures, issuance of operational regulations, and definition of the sectors to be covered by the regulated market.

Beginning in 2026

Monitoring and Market Preparation
Covered entities begin implementing emissions monitoring, reporting, and verification (MRV) processes, enabling a gradual transition to the new framework before mandatory compliance takes effect.

2027–2029

Transition period
Progressive consolidation of market rules, gradual establishment of emissions caps, and continued development of carbon credit trading mechanisms.

2030

Full Market Operation
The SBCE becomes fully operational, with mandatory emissions-reduction targets, carbon-credit trading, and enforcement of the compliance framework established under the system.

Download the full brief here.