Reduction of Emissions, Credits and Market


It emerged from the Kyoto Protocol in 1997, which aims to reduce greenhouse gases, which cause various environmental problems associated with climate change.

Carbon credits or Certified Emissions Reduction (CER) are certificates issued to a person or company that has reduced its greenhouse gas (GHG) emission. By convention, one ton of carbon dioxide (CO2) corresponds to a credit of carbon. This credit can be traded on the national or international market. The reduction in the emission of other gases, which also generate the greenhouse effect, can also be converted into carbon credits, using the Carbon Equivalent concept. Depending on the market context, the types of credits and the form of commercialization, prices vary.

The Carbon Market and the Kyoto Protocol

Concern for the environment led the countries of the United Nations to sign an agreement stipulating control over human interventions in the climate. This agreement was born in December 1999 with the signing of the Kyoto Protocol. In this way, the Kyoto Protocol determines that signatory developed countries reduce their greenhouse gas emissions by 5.2%, on average, relative to the year 1990, between 2008 and 2012. This period is also known as the first commitment period. . In order not to compromise the economies of these countries, the protocol established that part of this reduction can be done through negotiation with nations through the flexibility mechanisms.

One of the flexibility mechanisms is the Clean Development Mechanism (CDM). The CDM carbon credit is called Certified Emission Reductions (CER) – or in English, Certified Emission Reductions (CER). One CER corresponds to one ton of carbon dioxide equivalent.

More information about the process of generating CERs and the process of certifying them is presented in the article on Clean Development Mechanism.

CDM – The Clean Development Mechanism

Included in the Kyoto Protocol, it is an important subsidy in the pursuit of sustainable development by promoting efficiency and renewable energy and reforestation projects, among other actions.

The CDM allows emission reduction projects in developing countries to earn Certified Emissions Reductions (CERs), each equivalent to one ton of CO2. These CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol. The mechanism encourages sustainable development and emission reductions, while industrialized countries give some flexibility in how they meet their emission reduction reduction targets.

The Voluntary Markets

Groups and sectors that do not need to reduce their emissions in accordance with the Kyoto Protocol or companies located in countries that are not signatories of the Kyoto Protocol have the alternative of trading emission reductions in the so-called voluntary markets.

While there are other markets, we are prioritizing the VCS – Verified Carbon Standard which is a greenhouse gas accounting program used by projects around the world to verify and issue carbon credits in voluntary markets.

VCS – Verified Carbon Standard

Project proponents are the owners or authors of activities that reduce or remove carbon emissions from the atmosphere. Projects can engage in a range of activities such as soil carbon sequestration, forestry and avoided deforestation.

ESG - Corporate Social and Environmental Responsibility

The ESG is a program that aims to neutralize the carbon emissions of the companies' emission inventory. Whenever possible, in addition to carbon, adding other ecosystem services such as biodiversity and water.

The program basically follows the same rules as the CDM and the VCS, thus bringing credibility during the neutralization process. With the aim of creating a voluntary market that is primarily recognized nationally and that values the socio-environmental initiatives of entrepreneurs in the six Brazilian biomes.