Rio de Janeiro to set up carbon trading exchange
Mon, 19 Dec 2011 20:00 GMT
A member of the World Wildlife Fund (WWF) Brazil adjusts 6,000 balloons, representing the country's daily emission of 6 million tonnes of greenhouse gases, in front of the National Congress in Brasilia, June 2007. REUTERS/Jamil Bittar
* Rio to set up carbon credit exchange on Tuesday
* To trade carbon, other pollutants to meet Rio targets
* Trading likely to begin in 2013
By Peter Murphy
BRASILIA (Reuters) - Rio de Janeiro state will set up Brazil's first carbon exchange on Tuesday that beginning in 2013 will allow businesses to trade credits to comply with mandatory pollution limits Rio plans to introduce in 2012, the state's environment department said on Monday.
From now until when trading is expected to begin in 2013, the exchange will create a trading platform and define contract criteria.
The "Bolsa Verde" or "Green Exchange", a partnership between Rio's environment and finance departments, aims to establish pollution caps before the United Nations-sponsored Rio +20 environment conference takes place in its capital city in June.
Walter Figueiredo de Simoni, deputy head of the project at Rio's environment department said the exchange's focus would be carbon credits but that it would trade credits for industrial effluents and mandatory forest coverage in rural areas as well.
"The trading probably won't start until 2013 ... Our thinking is that carbon markets will expand in Brazil and hopefully eventually we will have a national cap and trade system," de Simoni said.
Rio's government contracted the Point Carbon consultancy, owned by Thomson Reuters, to help it define appropriate levels for pollution caps while seeking to preserve the state's competitiveness.
Rio estimates it emitted about 72 million tonnes of carbon dioxide equivalent (CO2e) in 2008, with one third of that coming from industry.
The expected passage of a Brazil's revised forestry code will require thousands of farmers to set aside more of their land with forest cover. The exchange hopes to introduce an offsetting asset to do this virtually by enabling those with excess coverage to sell credits on it to those falling short.
For details of the forestry code see:
Brazil's stocks and commodities exchange BM&FBovespa launched trading in carbon offsets in 2007, but the papers traded at the Rio exchange will be the first created to enable companies to meet mandatory emissions limits.
Under the Kyoto Protocol, Brazil has committed to reducing its carbon dioxide emissions by between 36 and 39 percent by 2020.
Rio de Janeiro is second in population and gross domestic product to the neighboring state of Sao Paulo, but it is home to some of Brazil's biggest emitters, including steelmakers, national oil company Petrobras and mining giant Vale.
The launch comes as carbon prices are at record lows, with the two main European Union and U.N.-backed markets stricken by flagging investments, an oversupply of emissions permits and worries about an economic slowdown.
New investment in the U.N.'s Clean Development Mechanism, which rewards clean energy investments in poorer nations with carbon offsets, fell last year to just a fifth of its record high in 2007 of $7.4 billion as many project developers and traders scaled back their activities.
(Reporting By Peter Murphy; editing by Bob Burgdorfer)
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