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New Provisional Presidential Decree allows the sale of carbon credits in forest concessions and conservation units

27/12/2022

The new Provisional Presidential Decree (MP, in Portuguese) No. 1,151/2022, was recently published, and allows the sale of carbon credits and environmental services in the object of public concessions for forests and conservation units (protected areas). The rule extends the previously conferred rights, also including the exploitation of non-timber forest products and services, such as access to genetic heritage or associated traditional knowledge, forest restoration, tourism, among others.
The aforementioned MP also establishes criteria for recognizing the environmental asset of native vegetation as a financial asset.

More details 

The Provisional Presidential Decree amends, among others, Law No. 11,284/2006, which provides for the management of public forests for sustainable management. According to the new MP, the following rights are conferred on the object of the forest concession:

  • Sale of carbon credits;
     
  • Environmental services;
     
  • Access to genetic heritage or associated traditional knowledge for conservation, research, development and bioprospecting purposes;
     
  • Forest restoration and reforestation of degraded areas;
     
  • Management activities aimed to conserve native vegetation or prevent deforestation;
     
  • Tourism and visitation in the granted area;
     
  • Obtain products from the local biodiversity of the concession area.

Additionally, the MP determines that the bidding notice for forest concession must contain the rules so that the concessionaire can explore the sale of credit for environmental services, including carbon.

The forest concession contracts in force on the date of publication of the MP may be adapted to the new rules, since there is an agreement between the interested parties and the established obligations are preserved.

The MP also allows the BNDES (National Bank for Economic and Social Development) or other financial agents to act in financing operations, with resources from the National Fund on Climate Change.

Another important aspect of the new MP is the recognition of the environmental asset of native vegetation as a financial asset, being anything that provides:

(i) improvement activities encouragement, such as forest restoration, conservation and protection of native vegetation in their biomes;

(ii) economic and monetary valuation of native vegetation;

(iii) asset and accounting identification;

(iv) the possibility of using digital technologies with a single, immutable record and with high resilience to cyber-attacks.

The environmental assets of native vegetation can result from (a) reduction of emissions or removal of greenhouse gases; (b) maintenance or increase of forest carbon stock; (c) conservation and improvement of biodiversity, soil and climate; or (d) other ecosystem benefits, as per the National Payment Policy for Environmental Services.

The National Congress may present amendments to the text of the MP until February 5, 2023.
Our Environment, Climate Change and Sustainability team is available to provide further clarification on the subject.

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