Brazil has the potential to lead the world carbon market
January 05, 2022
By José Tadeu Arantes | Agência FAPESP – Brazil could become the Saudi Arabia of the new carbon economy. Just as Saudi Arabia is now the world’s largest oil exporter, contributing significantly to emissions of carbon dioxide (CO2) and global warming, Brazil has the potential to lead the emerging market for carbon capture and storage, which is fundamental to achieve the climate change mitigation target of temperatures more than 1.5 °C -2.0 °C below the pre-industrial average.
Brazil has huge reserves of reforestable land, amounting to some 50 million hectares all told, with the potential for spontaneous or assisted natural regeneration. Reforestation is by far the most effective way to capture and store atmospheric carbon.
These remarks were made by Renato Crouzeilles in a presentation entitled “Opportunities for entrepreneurship with ecological restoration, carbon market, and nature-based solutions”, delivered on November 30 during the webinar “Ecosystem Services”, the third and last event in the BIOTA Entrepreneurship Cycle organized by the FAPESP Research Program on Biodiversity Characterization, Conservation, Restoration and Sustainable Use (BIOTA-FAPESP).
Crouzeilles is a professor of graduate studies in ecology at the Federal University of Rio de Janeiro (UFRJ), a researcher affiliated with the International Institute for Sustainability (IIS) and executive director of IIS Australia. His presentation focused on the economic potential of environmental solutions, especially in the carbon capture and storage market.
“The voluntary carbon market is set to grow up to fifteenfold by 2030 compared to 2020. Between 7 gigatonnes and 13 gigatonnes of carbon will be sequestered per year by 2050, to offset emissions and achieve the net zero target,” he said. Net zero is defined as a point at which any residual emissions of greenhouse gases (GHG) are offset by the removal of GHG from the atmosphere.
According to Crouzeilles, the price of captured and stored carbon is still very low, but in regulated markets such as the European Union’s, a tonne (metric ton) of CO2 is already worth 69 euros (now about 78 USD or 58 GBP). “Demand is strong and growing. The price is also set to rise. Supply is scarce and quality low,” he said.
Three criteria are used to assess the quality of stored carbon, Crouzeilles explained. The first is “durability”, the risk of re-release into the atmosphere intentionally or involuntarily (e.g., by extreme weather events). The second criterion is “additionality”, which means the reduction in emissions would not have happened without the reforestation project. A project developed in order to produce timber cannot be presented as an addition made possible by financing obtained in the carbon market. The third criterion is “leakage”, the risk that deforestation or other activities causing a rise in GHG emissions are displaced to another site by the reforestation project.
“Brazil offers one of the best opportunities for low-cost reforestation on a large scale with the goal of removing CO2 from the atmosphere,” Crouzeilles said, listing four advantages: high carbon capture and storage potential; low-cost reforestation; a large amount of available land; and high potential for assisted natural regeneration.
Instead of closing their eyes to the obtuse policy of deforestation and natural resource predation, Brazilian economic actors should see forest conservation and reconstruction as one of the nation’s greatest assets and potentially one of its most profitable resources. “Owing to climate conditions, the Amazon and Atlantic Rainforests are among the best places in the world for carbon capture and storage. Moreover, the opportunity cost is low, especially in the Amazon,” Crouzeilles said.
By opportunity cost, he meant the amount of money landowners refrain from making if they use part of their land for reforestation instead of agricultural production. In places far away from the agribusiness expansion frontier, this type of land use change can be economically advantageous, not to mention its environmental virtues.
Large corporations like Microsoft, Apple, Amazon and others have committed to carbon neutrality (or net zero) by 2050, Crouzeilles noted, adding that Microsoft aims not only to achieve net zero but to “erase its entire carbon footprint”, past and future.
The carbon market is highly promising for Brazil, but in his view urgent and speedy action is required: 2030 is fast approaching, and the goal of lowering global temperatures by 1.5 °C-2.0 °C is still far off. Some startups have enough flexibility and agility to occupy this space, he said.
The second part of the webinar consisted of a virtual round-table discussion among professionals with jobs in the world of ecosystem services: Paulo Groke, director of Ecofuturo, an institute maintained by pulp and paper maker Suzano; Marcelo Gomes da Silva Pereira, forest environment manager at Suzano; Isabel Duarte Coutinho, director and researcher at Natcrom Soluções Sustentáveis; and Andresa Berretta, manager of Apis Flora.
Groke spoke about Parque das Neblinas, an environmental reserve owned by Suzano and managed by Ecofuturo. Comprising 7,000 hectares of Atlantic Rainforest in different stages of recovery, the park is home to activities involving forest management and restoration, ecotourism, environmental education, scientific research, and community participation.
The next speaker was Pereira, who presented Suzano’s climate change mitigation objectives and nature-based solutions. The company is the world’s leading producer of eucalyptus pulp and has forests totaling 2.3 million hectares, of which 1 million hectares are conserved as native reserves. It plans to valorize and monetize this natural asset, incorporating ecosystem services into its portfolio, Pereira explained.
Moving from the universe of large corporations to that of startups, the webinar continued with a presentation by Isabel Coutinho, who described the activities of Natcrom, a startup supported by the FAPESP Innovative Research in Small Business Program (PIPE-FAPESP) and incubated at São Paulo State University (UNESP) in Araraquara.
Based on the idea of the circular economy in which waste is converted into resources, Natcrom produces botanical extracts and phytochemicals from raw materials thrown away by agro-industry, specifically using mango production chain rejects to make biopolymers.
In the last contribution to the round-table discussion, Andresa Beretta spoke about AgroBee, also a startup supported by PIPE-FAPESP. More than 70% of the crops grown by farmers worldwide depend on pollination by bees. AgroBee connects beekeepers with farmers who need bees to pollinate their crops. The connection is facilitated by a smartphone app that has a range of functions and operates somewhat similarly to a ride-hailing platform (more at: agencia.fapesp.br/34405).
Among the results accumulated by the initiative, Beretta cited a 17% average increase in coffee production per hectare during the flowering season.
The webinar on “Ecosystem Services” was chaired by Jean Paul Metzger, Professor of Ecology at the University of São Paulo and a member of BIOTA-FAPESP’s steering committee. The mediator for the round-table discussion was Carlos Alfredo Joly, principal mentor for BIOTA-FAPESP and recently appointed Emeritus Professor by the University of Campinas (UNICAMP). Professor Luiz Eugenio Mello, Scientific Director of FAPESP, participated in the opening.
A recording of the complete webinar on “Ecosystem Services” (in Portuguese) can be watched at: www.youtube.com/watch?v=6SOQNcY56C0.
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