Why carbon pricing in Brazil?
Pricing has proven to be a cost-effective and essential instrument in the transition to a low-carbon economy. In the case of Brazil, it will help the economy prepare for this trajectory when Brazil's mitigation advantages are increasingly less based on land use options (forestry and agriculture) and more dependent on energy and industrial emissions.
Why the preference for the market system?
The rejection of the tax mechanism is mainly due to the excess of the tax burden and the misuse of revenues. There are risks of dominance of fiscal objectives that may generate uncertainty in pricing objectives.
The Emissions Trading System (SCE) emission trading system – ETS) allows the flow of funds between regulated entities and not only to the government. It also allows more regulatory and institutional freedom to protect competitiveness with differentiated allocation of emission rights, displaced from the constraints of the tax code.
