The Brazilian Finance Ministry has introduced a preliminary strategy to gradually incorporate different industrial sectors into the nation’s upcoming regulated carbon market. The draft plan details how and when specific businesses will be mandated to account for and report their greenhouse gas emissions.
According to the ministry’s Extraordinary Carbon Market Secretariat, the monitoring, reporting, and verification requirements will be rolled out across three progressive stages over several years.
The Three-Phase Framework
The planned integration timeline breaks down by sector as follows:
- Phase 1 (Beginning 2027): This initial stage targets heavy industrial and high-emitting sectors, specifically paper and pulp, iron and steel, cement, primary aluminum, oil and gas exploration and production, refining operations, and commercial aviation.
- Phase 2 (Beginning 2029): The secondary wave will expand coverage to mining, recycled aluminum production, the electricity sector, glass manufacturing, the food and beverage industry, chemical production, ceramics, and waste management.
- Phase 3 (Beginning 2031): The final stage will bring the broader commercial transportation sector under regulation, specifically covering road, water, and rail transport.
Preparation and Rollout Rules
To help businesses adapt, the government will grant each sector a standardized four-year adjustment period. The first year of this transition is reserved for businesses to design and establish their emissions monitoring plans. Companies will spend the second and third years actively monitoring and logging their emissions data. By the fourth year, the government will implement national allocation plans for that specific sector.
Crucially, the initial phase focuses strictly on data collection. During this early tracking period, companies will only be required to report their emissions; they will not face any financial charges, penalties, or mandatory reduction requirements.
Next Steps
The government plans to open the proposal to a public consultation process in July. Feedback from this window will be used to refine the framework, with a finalized version of the carbon market rules expected to be officially released later this year.