Brazil seeks China carbon credit deal ahead of COP31
Brazil will use a China visit to gauge demand for its carbon credits and push for a bilateral market accord by COP31 in November.
Brazil is preparing to test China's interest in becoming a buyer of its carbon credits during a high-level visit to Wuhan from September 14 to 18. The trip will also advance negotiations toward a bilateral carbon market agreement that Brasilia hopes to finalize by the COP31 climate summit in Turkey this November, according to Cristina Reis, Brazil's carbon market secretary.
Discussions will run alongside meetings of a Brazil-China-EU coalition of carbon market jurisdictions, which together cover roughly 42% of global emissions. The grouping is expected to approve a work plan aimed at gradually aligning and integrating their trading systems.
Reis said the visit will help determine whether China could purchase internationally transferred mitigation outcomes (ITMOs) — carbon credits that count toward national emission targets under the Paris Agreement. No other country currently has an official ITMO trading agreement with China, which is expanding and reforming its emissions trading system, the world's largest.
"If that happens, Brazil needs to be the first to offer high-integrity credits," Reis said.
Brazil's credits are presently traded only on voluntary markets. Under 2024 legislation, the country is building a regulated carbon market that would allow companies to buy credits for official decarbonization targets and enable international ITMO trades.
The original plan was to verify credits for international trades between 2031 and 2035. However, the government is now considering industry requests to accelerate that timeline. "It is on the table," Reis said, noting that officials reviewing the submissions consider an earlier launch viable.
The coalition, which has 11 members and is courting more developing countries, believes mutual recognition of carbon assets could be achieved within a decade, said Ana Paula Cavalcante, Brazil's deputy secretary for carbon-market regulation and methodologies. She added that both the coalition and closer ties with China could help scale up carbon markets and unlock investment for Brazil's reindustrialization around new technologies.