Brazil proposes global integration of carbon markets at COP30

Participation will be voluntary, with the main purpose being to accelerate decarbonization and encourage implementation of the Paris Agreement

By Maiva D’Auria / COP30

Brazil arrives at COP30 with a landmark proposal: the establishment of the Open Coalition for Carbon Market Integration. Led by the Ministry of Finance, this initiative aims to harmonize standards and link existing carbon credit trading systems to boost liquidity, predictability, and transparency in the sector. The coalition forms part of the New Brazil – Ecological Transformation Plan, an innovative strategy by the Brazilian government to promote sustainable development by reconciling economic growth, social inclusion, and environmental preservation.

A key feature of the Brazilian proposal is that participation is voluntary and open only to countries that express interest. However, even after forming an initial group, the coalition will remain open to new members at any time.

According to Ms. Cristina Reis, Deputy Secretary for Sustainable Economic Development at the Ministry of Finance (Ministério da Fazenda/MF), the coalition’s central purpose is to accelerate the decarbonization of economies and encourage the implementation of the Paris Agreement. “The idea is that, together, countries can significantly reduce their emissions so that the planet is less threatened by the climate crisis and the adverse effects of greenhouse gases,” she states.

Ms. Reis emphasizes that the proposal goes beyond the environmental dimension, offering an integrated economic and social solution. “The coalition will introduce new technologies and innovative solutions for decarbonization, and enable the exchange of best practices among participating countries. It will also establish new production standards that prioritize products with lower carbon content. This entire framework may become a competitive advantage in trade and investment and, in the wake of these transformations, foster job creation and reduce inequalities.”

Dr. Catherine Wolfram is on the committee of economists advising the COP30 Presidency. She notes that, as the host country, Brazil has a powerful platform to advance practical measures toward a global carbon pricing structure.

“Carbon pricing is a key tool for stimulating decarbonization. It helps companies, consumers, and investors—literally all stakeholders—make decisions that reflect the cost of emissions, rewarding those who choose lower-carbon options.” Dr. Wolfram holds a Ph.D. in Economics from the Massachusetts Institute of Technology (MIT).

She adds, “We have a report that highlights how countries can raise their ambitions, reduce trade tensions generated by unilateral policies, and protect their domestic economies by working together on carbon pricing and offering incentives for low- and middle-income countries to participate.”

Income redistribution

Another aspect of the proposal involves establishing mechanisms for income redistribution among member countries. The Open Coalition acknowledges that each nation's contributions to global emissions and decarbonization targets vary according to their economic size, territorial size, population, and types of productive activities. To reflect this heterogeneity, the initiative allocates a portion of the revenues generated from the distribution of decarbonization quotas through a process of "revenue recycling," ensuring a fair transition. The coalition is expected to reduce inequalities between countries and within each participating society in this way.

Brazilian emissions trading system

Currently, around 80 countries or jurisdictions have direct carbon pricing systems, with just under 40 operating carbon trading systems, i.e., regulated carbon markets.

In December 2024, Brazil passed Law No. 15,042, establishing the Brazilian Emissions Trading System (Sistema Brasileiro de Comércio de Emissões/SBCE), the regulatory framework for the national carbon market. The goal is to reduce greenhouse gas emissions and encourage the development of low-carbon technologies. With this law, Brazil joins the group of countries with regulated carbon pricing systems, strengthening its position in the global fight against climate change. Beyond garnering international recognition, the new law provides legal certainty and encourages the participation of the private sector participation in the decarbonization agenda, which is one of the country’s commitments under its Nationally Determined Contribution (NDC) —the Brazilian government’s document registering the country’s key commitments under the Paris Agreement. 

COP30 is the COP of implementation, so it is crucial to involve the financial sector and finance ministries to take action. In the regulated carbon market, the Open Coalition accomplishes this by encouraging large emitters (companies and industries in energy, transportation, and other sectors) to decarbonize. Thus, the adverse effects of production, such as pollution, which affect the public good (e.g., the climate and quality of life on the planet), become internalized. Large emitters will thus have to assume responsibility and move forward with decarbonization, concludes Undersecretary Cristina Reis.

English version: Trad. Bárbara Menezes.
Proofreading by Enrique Villamil.