- The Brazilian state of Pará has agreed to sell millions of carbon credits to multinational corporations, including Amazon, Bayer and Walmart Foundation, but many challenges loom.
- Experts are concerned the deal is overly ambitious and worry about the state’s long history of carbon credit project scams.
- Although Indigenous, Quilombola and extractive community entities support the arrangement, other community members state they have not been consulted about the project on their lands.
NEW YORK CITY, U.S. — The Brazilian state of Pará, home to a quarter of the country’s Amazon Rainforest, signed what it has deemed “the largest carbon credit deal in the world.” Per the agreement, the state is selling 12 million carbon credits to a conglomerate of 30 multinational corporations, including Amazon, Bayer and Walmart Foundation. The sale totals 1 billion reais ($183 million) but could evolve into a multiyear, multibillion-dollar carbon offset program.
The state’s governor, Hélder Barbalho, signed the agreement to much fanfare during New York Climate Week on Tuesday, Sept. 24, with the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition of corporations. However, Mongabay’s interviews with nearly a dozen sources revealed many more steps and challenges to overcome before the deal becomes a reality.
For now, the participating companies have agreed to purchase 5 million carbon credits for $15 per metric ton of CO2 or equivalent GHG emissions. The amount is based on deforestation reduction in the Amazon between 2023 and 2026. Another 7 million credits are being made available to the private sector, with the governments of Norway, the United Kingdom and the United States committing to covering the costs of unpurchased credits in case there are no other buyers.
But before any money changes hands, the state of Pará must acquire certification from the Architecture for REDD+ Transactions (Art Trees) — a process that could take another 18 months, per the Amazon Environmental Research Institute (IPAM), which acts as the state’s technical adviser.
“We expect to acquire this certification in the first half of 2025,” the governor told Mongabay at the event. “We will then divide the profits among local communities, including Indigenous people, extractivist communities, Quilombolas and family farmers. The state government will also take a share to finance the continued reduction of deforestation and improving land use in our state.”
The Art Trees certification, a standard for jurisdictional carbon credit initiatives, will verify the state’s capacity to measure, monitor and report emission reductions. Jurisdictional projects spread over an entire jurisdiction, such as a state or a nation, and are typically run by the local government. “We have to pass an international audit,” Gabriela Savian, deputy director of public policy at IPAM, told Mongabay. “I believe the state will eventually be approved due to its political, climate and governance structure. But there’s always the risk of having an auditor who may not know the country and its policies and may not understand the complexities of Brazil.”
Pará is the second-largest state in Brazil, with an area the size of Angola and a long history of environmental crimes. Much of the so-called deforestation arch extends through the state, an area with the highest clearing rates in the past decades. Despite having more than 40 Indigenous territories occupying one-fourth of the state, Pará is one of the main hubs for deforestation, land-grabbing and illegal mining in Brazil.
Before issuing its first batch of carbon credits, the regional government also wants to draft and pass new legislation that broadly establishes the functioning of its jurisdictional system for carbon credits. It plans to hold a series of public forums in 2025 and issue a decree establishing the division of the program’s benefits to local communities.
Given the long road before implementation, climate experts say they believe the governor jumped the gun in announcing the deal.
For Juliana Maia, a climate policy analyst at Brazil’s Instituto Socioambiental, a nonprofit that advocates for environmental and Indigenous rights, signing a contract at New York Climate Week was very much a political move. The governor of Pará is preparing to host the 2025 U.N. Climate Change Conference (COP30) and has big political ambitions. “The event made a big splash,” she told Mongabay. “But it caused a bit of confusion regarding the timeline of Pará’s jurisdictional project. It’s very much in the beginning stages.”
Unlike most governors of Amazonian states, Barbalho is an ally of President Luiz Inácio Lula da Silva, who took office in 2023 and has pledged to end deforestation in Brazil by 2030.
There are also concerns that the project is overly ambitious. The initiative has promised to protect private, public and Indigenous forestlands in a state twice the size of France. The plan is to measure deforestation rates every five years. From that baseline, the government will issue credits for forests that could have been destroyed but weren’t.
“There’s a fragility to these projects because you are measuring the rate of deforestation that could have happened if the state had not taken action,” Shigueo Watanabe Junior told Mongabay. He is a senior climate policy specialist at the Talanoa Institute, a Brazilian think tank dedicated to climate policy. “But physics hasn’t invented a way to measure ghosts. We can’t measure what didn’t happen.”
Another challenge in this method are the record-breaking wildfires devastating the Brazilian Amazon. From January to August 2024, fires destroyed more than 4.1 million hectares (10 million acres) of forest, an area the size of Switzerland. The most impacted states were Pará and Mato Grosso. “If the forest catches on fire, the carbon that has been absorbed goes right back into the atmosphere,” said Watanabe Junior. “But the companies that are buying that credit have already polluted. If their carbon credit goes up in smoke, they now owe humanity.”
A history of carbon offset scams
Carlos Augusto Ramos, researcher at the Amazon Institute for Family Farming of the Federal University of Pará, is especially troubled by the state’s intention to overlap the new system with existing carbon offsetting projects. Many of these private initiatives have been revealed as scams in the past few years.
In these schemes, criminals falsely registered protected forests in their name using Brazil’s Rural Environmental Registry (CAR). The system allows for anyone to claim public or private lands as their own. With this documentation in hand, they obtained certification from Verra, a well-known standard for carbon offset projects, and sold carbon credits to big corporations.
Near the Marajó Island, in Pará, three private projects used this method to sell millions of fake carbon credits in the last few years to Boeing, Samsung and the British soccer team Liverpool. The projects claimed to protect and monitor more than 451,900 hectares (1,116,669 acres); however, no action was ever recorded on the ground. The criminals behind the scams are now being prosecuted in the Brazilian courts.
“Before we implement an enormous jurisdictional project, we need to clean house,” said Ramos, who is from Marajó. “Where I’m from, there are more CAR registrations than actual land. We need to do a big inventory of private projects and ensure self-proclaimed documents cannot be used for money-laundering schemes.”
In Amazonas state, two major carbon offset projects, whose credits have been sold to companies like GOL Airlines, Nestlé, Toshiba and PwC, may have laundered timber from illegally deforested areas, according to a Mongabay investigation. The same projects were targeted by a Federal Police probe, which resulted in arrests and seized assets linked to people involved with them. Besides laundering illegal timber, investigators say the proponents grabbed public land to create the carbon offset projects.
The Nature Conservancy (TNC), an international non-profit that is supporting the implementation of Pará’s jurisdictional system, has indicated the government is considering creating a new register to account for private projects. The goal of the register would be to avoid credits being “double-counted,” or claimed by more than one organization or governmental body. Whether the new system would consider CAR registration a valid document is unclear.
Looking at the big picture, Ramos calls for better regulation for both private and jurisdictional carbon markets. “In theory, jurisdictional projects have to respond to public institutions, and we’ll see how that goes in Pará,” he said. “However, private initiatives exist in a lawless ‘Wild West’ and need to be reined in before more damage is done.”
Brazil currently doesn’t have a nationwide regulated carbon credit market. Several attempts to pass legislation have failed. Most recently, a 2023 bill proposed regulations for the industrial, renewable energy and forest sectors. The bill received so many additions from Brazilian legislators that it was nicknamed “Frankenstein.” It strongly favored the private sector and excluded agricultural lands where most deforestation takes place. As negotiations continue, the legislation remains in limbo to this day.
Brazil’s minister of the environment, Marina Silva, has publicly called on Congress to resume negotiations, given the many instances of fraud. “One of our ambitions is that the Brazilian carbon market becomes reliable, has transparency and integrity,” she said recently.
Community resistance
As Governor Barbalho signed the agreement in New York, he stood next to community leaders from the Federation of Indigenous Peoples of Pará (FEPIPA), the Coordination of Associations of Quilombo Communities of Pará (Malungu) and the National Council of Extractivist Populations (CNS). For the last year, these entities have participated in meetings and workshops about the project.
However, the very next day, Indigenous representatives complained on social media about not being included in the negotiations. In the following weeks, 38 entities representing Indigenous and traditional communities published an open letter accusing the government of Pará of violating their right to Free, Prior and Informed Consent. “This consultation must include the delivery of clear and accessible information, allowing communities to understand the implications of decisions,” says the letter.
Goldman Prize winner Alessandra Korap Munduruku, who acted as vice coordinator of FEPIPA until 2019, said she did not feel represented by the federation. “I was shocked to hear a contract had been signed with international companies. I have not seen this contract. I do not know its terms,” said Korap, who now coordinates the Pariri Indigenous Association, representing 15,000 Munduruku Indigenous people in southwest Pará.
She said she worried the initiative would enforce restrictions on Munduruku territory, which totals 178,175 hectares (440,280 acres), including limiting traditional hunting and fire management. “I fear our people will lose autonomy over our land because we’ll have to consult companies and the government before engaging in practices we have maintained for generations.”
Moreover, Korap is unhappy with the planned division of benefits from the sale of the credits. The Pará government’s initial estimate established that 24% of profits would be designated for Indigenous people, 42% for other local communities, while the state would keep the rest. The final amount will be decided after a round of regional consultations and issued by decree.
Ronaldo Amanayé, FEPIPA’s representative at the signing, told Mongabay this is a good opportunity for Indigenous people. However, he attributed the project’s success to the government fulfilling a broader Indigenous agenda, including land demarcation for their territories. “While the governor does not decide on land demarcation, we hope he will use his political influence to get this done at the national level.”
Francisca Arara, the secretariat for Indigenous peoples of Acre, offered some lessons learned to the residents of Pará. Acre was the first Brazilian state to implement a jurisdictional carbon credit system in 2010; Tocantins followed in 2023. “They should think very carefully about what is being offered,” she told Mongabay. “Since we first agreed to the terms in Acre, 10 years have passed, and a lot has changed. I don’t think those initial conversations were very clear or transparent.”
Banner image: The governor of Pará Helder Barbalho and community leaders after signing the deal with the LEAF Coalition of corporations. Images courtesy of SEMAS.
CORRECTION (10/10/2024): A previous version of this article stated that Pará state is considering creating a new register to account for private projects through The Nature Conservancy (TNC). The nonprofit is supporting the implementation of Pará’s carbon credit initiative, but the new register would not be managed by TNC. The post has now been corrected.
As one Brazilian state takes up carbon trading, others may fall for the ‘illusion’
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