The creation of the Brazilian Emissions Trading System (SBCE) represents more than a regulatory milestone for the carbon market. It also addresses an issue that has long been at the center of legal debate: the legal characterization of carbon credits. Although the voluntary carbon market has long supported transactions in Brazil and abroad, the absence of a clear legal framework created uncertainty regarding the treatment of these assets and limited the development of a broader regulatory structure.

According to Paloma Rosa, partner in the Tax practice at Vieira Rezende, one of the most significant advances introduced by Law No. 15,042/2024 was precisely the resolution of this issue. By classifying carbon credits traded in the regulated market as financial assets when negotiated in financial and capital markets, the legislation provides a stronger foundation for the sector’s development. “To encourage an activity, you first need to define the legal nature of the asset being traded,” she says. This definition is significant not only from a legal perspective but also from an economic one, as it directly influences how these assets will be structured, taxed, and traded.

Greater clarity regarding the nature of carbon credits becomes even more important as Brazil implements its consumption tax reform. While the carbon market law has already established certain tax parameters, the interaction between the new carbon market framework and the taxes introduced by the reform will continue to evolve through future regulation and interpretation. Despite these remaining uncertainties, Rosa notes that the reform’s underlying logic points toward a tax framework compatible with Brazil’s decarbonization objectives. For the first time, environmental protection has been expressly incorporated into the guiding principles of the national tax system, reinforcing the expectation that taxation will serve as a policy instrument to encourage the development of the carbon market. “The tax system should not be an obstacle. On the contrary, it should function as an incentive for this activity,” she explains.

Beyond providing greater legal certainty for existing transactions, this framework is expected to create the conditions necessary to expand the regulated carbon market itself. The combination of a clearer legal framework, specific rules governing the trading of carbon credits, and a constitutional mandate supporting environmental protection helps reduce uncertainty and encourage broader participation by companies and investors. In a market that is still in its formative stages, strengthening these institutional foundations may prove just as important as creating the carbon assets that will ultimately be traded.

Download the full brief here.