Decarbonization

With a predominantly renewable energy matrix and abundant natural resources, Brazil is positioned to lead in the production of sustainable fuels, carbon capture and storage (CCS) technologies, and nature-based solutions

The implementation of a regulated carbon market, together with the regulation of the Paris Agreement, offers a unique opportunity for the expansion of low-emission sectors. Nevertheless, substantial challenges remain to be addressed, such as high implementation costs and international uncertainties related to the CBAM

Our view on the industry

Decarbonization is at the center of global policies to address climate change, and Brazil has a key role to play. With its predominantly renewable energy matrix and vast natural resources, the country has the potential to lead both in the production of sustainable fuels and carbon capture and storage (CCS) technologies and in nature-based solutions. Reforestation, ecosystem restoration, and sustainable land management projects offer an effective approach to removing emissions and generating carbon credits, positioning Brazil as one of the leading players in the global carbon market.

The creation of a regulated carbon market, currently undergoing legislative discussion, and the regulation of Article 6 of the Paris Agreement broaden the opportunities for the growth of sectors focused on low-emission fuels, low-carbon hydrogen, and natural solutions that contribute to emissions mitigation. Hard-to-abate industries, such as steel, cement, and chemicals, are beginning to explore new technologies such as CCUS, while nature-based solutions complement these initiatives by sequestering carbon in a sustainable manner.

Significant challenges nonetheless remain. In addition to the need for clear regulation of the carbon market, Brazilian industry faces high implementation costs for technologies such as CCS and uncertainties regarding competitiveness in the face of international environmental barriers, such as the CBAM (Carbon Border Adjustment Mechanism). Scaling up nature-based solutions also requires greater structuring of economic incentives and the integration of such large-scale projects to ensure concrete impacts on emissions mitigation.

By combining technological and natural solutions, Brazil has the opportunity to lead the transition to a low-carbon economy while meeting its climate commitments. The synergy between public policy, technological innovation, and the sustainable use of its vast natural resources will allow the country to balance economic growth with environmental preservation, strengthening its global position as a benchmark in decarbonization.

Development of the regulated carbon market
CCUS: Projects in carbon-intensive industries
Brazil as a global hydrogen production hub
Integration of nature-based solutions with mitigation technologies, such as BECCS
New international markets

Lack of predictability regarding the structuring of the carbon market
Pricing in the industrial sector vs. competitiveness
Pressure on exporters, with environmental fees and barriers, such as the CBAM
Regulatory vacuum, notably for CCUS, the regulated market, and Hydrogen
High cost of decarbonization implementation and infrastructure
Scalability of natural solutions and their economic impacts

Growth in demand for carbon credits from the voluntary market
Accelerated adoption of carbon capture technologies in hard-to-abate sectors
Expansion of Brazilian nature-based solutions projects
Regenerative practices and bioenergy with carbon capture

Work Highlights

Identifying opportunities and challenges in the Brazilian Emissions Trading System

We provide ongoing strategic support to our client in identifying business opportunities, regulatory barriers, and carbon market impacts across various sectors, such as the production of low-emission fuels, hydrogen, and projects aimed at generating carbon credits. Our work is geared toward ensuring that the company is well positioned in light of the new regulations and requirements of the carbon market

Contracts and agreements, facilitating the generation of carbon credits

We provide specialized support in the drafting and negotiation of contracts and memoranda of understanding aimed at the generation and trading of carbon credits. Our work spans from project structuring to the closing of commercial agreements, ensuring that all legal, regulatory, and commercial aspects are properly aligned to maximize the value of the credits generated

Due diligence on carbon credits, ensuring compliance and certification

We provide specialized support in due diligence of areas for projects aimed at generating carbon credits, ensuring compliance with the requirements necessary for credit certification. Our work also includes the review of contract drafts, ensuring alignment with regulatory and environmental standards. In addition, we conduct an in-depth analysis of the legal requirements set out in voluntary carbon market methodologies, ensuring that these requirements are properly reflected in the project structure

Training and literacy

We provide specialized support in the training and literacy of internal teams of various clients, preparing them to understand and navigate the challenges and opportunities of the carbon market. Training focused on developing competencies that enable strategic alignment with regulations and the maximization of opportunities within an increasingly regulated market

Advocacy in the sector

We provide legal and strategic support for the structuring and development of sustainable fuel production projects, with the anticipated issuance of carbon credits. Our work includes specialized support in due diligence of the areas to be used, ensuring compliance with the requirements necessary for carbon credit certification. We also advise on the review of contract drafts, ensuring that they are aligned with regulatory and environmental standards. In addition, we conduct an in-depth analysis of the legal requirements set out in voluntary carbon market methodologies, ensuring that these requirements are adequately reflected in the project structure, promoting compliance and the maximization of opportunities in the carbon credit market

Geological Carbon Capture and Storage

Our team worked on an innovative geological carbon capture and storage project focused on biogenic capture sources, addressing the technical and regulatory challenges of this type of operation. We provided comprehensive support in building the project's risk matrix, covering aspects such as technical, regulatory, and financial uncertainties, in addition to developing risk mitigation strategies. We also advised on the drafting and negotiation of the various legal instruments required to make the project viable, including investment agreements among different stakeholders and the development of Brazil's first Joint Operating Agreement (JOA) for the injection of CO₂ into geological reservoirs

Areas of Practice

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Isabela Morbach

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