Companies have until this Friday (28th) to submit input on the schedule proposed by the Ministry of Finance to implement MRV (measurement, reporting, and verification) obligations for greenhouse gas emissions and removals in the regulated carbon market. The draft ordinance under public consultation establishes a phased schedule for different economic sectors within the regulation of the Brazilian Greenhouse Gas Emissions Trading System (SBCE)^[1].

Why is the consultation relevant?

The proposal marks an important step towards implementing the SBCE by identifying the first sectors subject to future emission monitoring and reporting obligations. Companies in the listed sectors should assess the potential impacts of the schedule on their operations, particularly regarding the generation of emissions data, internal data reporting systems, and climate governance.

The proposed schedule is structured into three stages and covers the following sectors:

The sectors are identified based on the codes of Brazil’s National Classification of Economic Activities (CNAE). However, not all activities falling under these codes will necessarily be subject to regulation.

According to the Special Secretariat for the Carbon Market, the phasing-in accounts for the maturity of MRV methodologies in each regulated sector, as well as the market structure and the intensity of GHG emissions in these sectors.

What is MRV?

The MRV system is one of the pillars of the SBCE, as it establishes the basis for producing standardized, accurate, and comparable information on greenhouse gas (GHG) emissions and removals. This set of guidelines and rules is used to measure, report, and verify, in a standardized manner:

• GHG emissions by sources (companies or activities)
• GHG removals by sinks (forests and other ecosystems)
• Reductions or removals resulting from specific activities, projects, or programs

The MRV system will serve as the basis for monitoring the emissions of regulated operators^[2] and for the future operationalization of the SBCE. Among other obligations, these operators must:

• Submit a monitoring plan detailing the implementation of MRV obligations.
• Report GHG emissions and removals in accordance with the approved monitoring plan.
• Submit the periodic obligation reconciliation report – for facilities and sources that emit more than 25,000 tCO2e.

Demarest’s Environmental and ESG teams are available to provide further clarification, including on the development and submission of contributions to the public consultation.

^[1] System established by Law No. 15.042/2024 to regulate the carbon market in Brazil, including the limitation of GHG emissions and the trading of assets related to the reduction or removal of these emissions.

^[2] The operator is defined as the regulated agent in the SBCE, an individual or legal entity, Brazilian or incorporated under the laws of Brazil, who owns, directly or through a legal instrument, a facility or source associated with any GHG-emitting activity.