Brazilian prosecutors are calling for the cancellation of the largest carbon credit deal in the Amazon Rainforest, saying it breaks national law and risks harming Indigenous communities.
The 1 billion real ($175 million) contract, signed last year by the state of Pará, promises to sell up to 12 million metric tons of forest-based carbon credits to the LEAF Coalition, comprised of the U.S., U.K. and Norwegian governments, and companies like Amazon, Bayer, H&M and Walmart.
Prosecutors allege that the deal violates a law passed two months after its signing that bans the future sale of carbon credits, characterizing it as “an extractive and colonialist” form of negotiating and privatizing traditional territories.
“Countries of the Global North and their megacorporations … are setting the price of carbon from Pará’s forests, disregarding the social cost to public welfare and ecosystems,” federal and state prosecutors wrote in a formal recommendation issued April 15.
The deal sets a fixed price of $15 per metric ton of carbon, which would come from avoided deforestation between 2023 and 2026.
“The contract is a promise to sell something that does not yet exist and is not guaranteed as state property,” prosecutors wrote. “This speculation may lead to harassing approaches and considerable pressure on Indigenous and traditional communities.”
Both parties to the contract deny that the deal violates the law.
In response to Mongabay, the Pará government said the contract is not a final sale, but a preliminary agreement based on future emissions reductions. It says there’s no financial commitment until the emissions cuts are verified.
“Contract clauses expressly and strictly state that the sale is conditional on the verification of emission reductions,” the state-owned Environmental Assets and Holdings Company of Pará (CAAP) said in an email statement to Mongabay. “Until this verification occurs, there is no financial obligation between the parties, which rules out any characterization of an advance sale, as prohibited by law.”
Emergent, a U.S.-based nonprofit intermediary responsible for the financial transactions between the tropical forest countries and private sector, made the same argument in an email response: “Neither Emergent nor the Government of Pará believe that the contract contravenes Brazil’s new carbon market law.”
Mongabay asked Emergent if a set price and a statement describing credit areas “sold under a forward purchase contract” for the fourth quarter of 2024 would constitute a future sale of carbon. Emergent replied in an email that it “cannot comment further on this at present.”
Prosecutors have given Pará state until April 29 to annul the contract. In an email to Mongabay, prosecutors said they haven’t yet determined the next steps they will take if the recommendation is not followed.
Banner image: Pará Governor Helder Barbalho celebrates after signing the deal with the LEAF Coalition of corporations at New York Climate Week in September 2024. Image courtesy of SEMAS.
