The Brazilian government announced plans to tighten carbon market rules in response to a fraud involving companies linked to former banker Daniel Vorcaro, owner of Banco Master. Carbon Market Secretary Cristina Reis from the Ministry of Finance stated the case is serious and requires regulatory clarity to prevent irregularities. The measures aim to map environmental assets and distinguish legitimate credits from accounting and land frauds.
Companies linked to Daniel Vorcaro inflated their assets by R$ 45 billion by issuing carbon stock credits based on an irregular Amazon farm overlapping Union lands, using unauthorized methodology, as revealed by Folha de S.Paulo. This maneuver involved accounting and land fraud, leading to the liquidation of Banco Master by the Central Bank.
Cristina Reis, in an interview with Folha's C-Level videocast, described the episode as "a police case" and stressed the need for a "tightening of the rules." The government plans to map all environmental assets, clarifying concepts, measurement, reporting, and verification methodologies. The goal is to encourage legitimate projects and position Brazil as a hub for trading green assets, including carbon credits in investment funds.
Reis has until year's end to regulate the market and establish its regulatory body, possibly an agency with over 100 qualified technicians via public contest. Alternatives include a decentralized model across ministries. The Finance Ministry prefers the agency under its purview, prioritizing efficiency and distributive justice without political capture.
Other assets mentioned include RenovaBio's Cbio, environmental reserve CRAs, biomethane certificates, and energy-related items. The Vorcaro case highlighted confusions between carbon stock and credits, with flawed audits and use of public lands. The secretariat will convene a working group for credits on Union lands, foreseeing concessions benefiting indigenous peoples, quilombolas, and family farmers, while remunerating the Union.
Reis denied a timid government response, stating the Finance Ministry regulates, not investigates, and the market could add 5% to GDP by 2040, creating jobs. Agribusiness, excluded from the regulated market, can participate in the voluntary one for offsets.
