Law No. 15,042/2024, enacted on 11 December 2024, marks a significant step in regulating Brazil’s carbon market. It consolidates the legal framework for the trading of carbon credits under the Brazilian Emissions Trading System (SBCE), offering greater legal certainty to investors and companies interested in operating within the emissions compensation sector in Brazil.

The SBCE is modeled after established initiatives such as the European Union Emissions Trading System (EU ETS) and California’s Cap-and-Trade program. It sets out clear rules for the issuance, acquisition, trading, and offsetting of carbon credits, ensuring predictability and alignment with international best practices. This framework enables foreign companies to operate in Brazil with stronger regulatory confidence.

One of the key governance mechanisms introduced by Law No. 15,042/2024 is the creation of a Central Carbon Credit Registry. This registry is designed to ensure traceability, verifiability, and the authenticity of transactions. It allows effective oversight of issued credits, prevents fraud, and safeguards the environmental integrity of the system.

The law also provides for the potential integration of the SBCE with international carbon markets. This opens the door for Brazilian credits to be traded globally, strengthening Brazil’s strategic position in the global carbon economy. The country holds significant potential to generate high-quality credits, particularly through forest conservation (REDD+), reforestation, renewable energy, and carbon capture in the agricultural sector.

To participate in the Brazilian market, foreign investors and companies must form strategic partnerships with project developers and legal counsel specialized in the relevant areas of law—including environmental, real estate, contract, corporate, business, and tax law—to ensure full compliance with legal requirements for credit registration and validation from the project’s outset.

In this context, foreign companies entering the sector should conduct thorough legal due diligence to ensure that all operations comply with applicable law. With this new regulatory framework, Brazil positions itself to lead the transition toward a low-carbon economy, offering a legally secure and economically attractive environment for investors committed to sustainability.

Glossary – Civil/ Environmental

Law No. 15,042/2024 – Brazilian federal legislation establishing the regulatory framework for the carbon market.

Brazilian Emissions Trading System (SBCE) – National system that governs the issuance, trading, and offsetting of carbon credits in Brazil.

Central Carbon Credit Registry – National platform for tracking and verifying carbon credit transactions in Brazil.

Environmental integrity – The credibility and effectiveness of the carbon market in achieving real emissions reductions.

REDD+ – Reducing Emissions from Deforestation and Forest Degradation, a climate change mitigation strategy recognized by the UN.