By its own admission, Brazil, with its continual destruction of the Amazon rainforest, is not the world’s most environment-friendly country. Yet South America’s largest economy is cleaning up its act and making money at it too, pioneering the carbon dioxide credits market in the region. According to the Universidade Federal do Rio de Janeiro, Brazil could earn about $3 billion a year from 2012 in trading carbon credits by selling other polluting nations the right to maintain their emissions without facing heavy fines under the Kyoto Protocol.
In late January, Rio began testing its first biodiesel passenger buses, which in full service could generate $2 million in carbon credits a year from around 2008. According to Brazil’s trade and development ministry, the global carbon credit trade could reach $40 billion a year in 2010, with about $21 billion traded outside the European Union’s emissions trading scheme.
Brazil’s futures market, the Bolsa Mercadorias & Futuros, has been particularly quick to catch on and has developed a carbon credit exchange in Rio to provide a developing world alternative to the Chicago Climate Exchange and the European market. The internet-based trading system, which was set up late last year, enables companies to register greenhouse gas-free projects – ranging from energy generation from renewable fuels to capturing methane gases from waste landfills to provide electricity – which are then analysed by the BM&F and put forward for trading.