Brazil has formally approved the regulatory framework for its long-anticipated national carbon market, marking a major milestone in the country’s climate and economic policy agenda. Cleared on December 28, 2025, the framework establishes a mandatory emissions trading system for large industrial polluters across sectors such as power generation, cement, steel, oil and gas refining, and agribusiness-linked processing industries. Under the new system, companies that exceed their allocated emissions caps will be required to purchase verified carbon credits, while firms operating below their limits can trade surplus allowances, creating a regulated market signal for decarbonization.
A defining feature of Brazil’s approach is the formal integration of nature-based solutions into the carbon market. Credits generated through forest conservation, reforestation projects, and regenerative agricultural practices—particularly in the Amazon and Cerrado biomes—will be eligible for compliance use. Policymakers argue this structure uniquely aligns emissions reduction with biodiversity protection, land-use reform, and income generation for rural and Indigenous communities, positioning Brazil as a global reference for climate markets rooted in natural capital.
The framework also introduces strict monitoring, reporting, and verification standards to ensure environmental integrity and prevent greenwashing. A centralized registry will track emissions allowances and credit transactions, increasing transparency and investor confidence.
Implementation will begin with a one-year pilot phase, followed by a gradual rollout starting in late 2026. Analysts expect the system to unlock billions of dollars in green investment, strengthen Brazil’s access to international climate finance, and enhance its negotiating leverage in trade discussions as carbon-related border measures become more widespread globally.
