What is the SBCE (Brazil’s emissions trading system)

The SBCE (Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa, or Brazilian Greenhouse Gas Emissions Trading System) is Brazil’s mandatory cap-and-trade programme for greenhouse gas emissions, established by Federal Law 15,042 of 11 December 2024. It is the country’s first economy-wide emissions trading system, designed to place a binding ceiling on emissions from regulated sectors and allow participants to trade emission allowances and verified reduction certificates within a government-supervised framework. The system is overseen by the federal government and is still under development, with the government indicating 2030 for the start of operation. For the full picture, see our SBCE explainer.

How the SBCE works in practice

The SBCE follows the cap-and-trade logic used by programmes such as the EU Emissions Trading System. The government sets an aggregate cap on the total volume of greenhouse gas emissions permitted across regulated sectors. It then distributes emission allowances, called CBEs (each representing the right to emit one metric tonne of CO2 equivalent), to regulated entities. At the end of each commitment period, every entity in the compliance tier must hold enough SBCE assets to cover its verified emissions. Entities that emit less than their allocation can sell surplus allowances; entities that exceed their allocation must purchase additional allowances on the market or use CRVEs (Certificados de Redução ou Remoção Verificada de Emissões) within the limit set in the National Allocation Plan.

Consider a cement plant that receives an allocation of 500,000 allowances for a given commitment period but verifies emissions of 540,000 tonnes of CO2e. The plant has a shortfall of 40,000 allowances. It can close this gap by purchasing allowances from another regulated entity that emitted below its cap, or by surrendering CRVEs generated by projects under methodologies accredited by the managing body, up to the maximum percentage allowed in the National Allocation Plan. If the plant fails to reconcile its position, it faces the administrative penalties set in Article 37 of the law, including fines of up to 3% of group gross revenue.

Implementation phases

Law 15,042/2024 does not switch the system on overnight. Article 50 lays out five phases:

• Phase I (regulation): 12 months from the law’s entry into force on 12 December 2024, extendable by another 12, for the federal government to issue the implementing regulation.
• Phase II (preparation): one year for operators to put in place the instruments for emissions reporting.
• Phase III (reporting only): two years in which operators must submit a monitoring plan and report emissions and removals, without allowance obligations.
• Phase IV (first National Allocation Plan): the first Plano Nacional de Alocação takes effect, with free distribution of CBEs and the start of the SBCE asset market.
• Phase V (full implementation): from the end of the first National Allocation Plan.

Which sectors are covered first depends on acts of the managing body. In July 2026 the Ministry of Finance put to public consultation a proposal to start MRV obligations in 2027 for pulp and paper, integrated steel, cement, primary aluminium, oil and gas production, refining and air transport, with other sectors added by 2029 and 2031.

How the SBCE applies in Brazil

The legal foundation is Federal Law 15,042/2024, which also amends Brazil’s National Policy on Climate Change (Law 12,187/2009). Governance has three parts: the Interministerial Committee on Climate Change (CIM), which sets guidelines and approves the National Allocation Plan; a managing body, which regulates, issues CBEs, keeps the Central Registry and applies sanctions; and a Permanent Technical Advisory Committee. The permanent managing body has not yet been created; since Decree 12,677/2025, its powers are exercised on an interim basis by the Extraordinary Secretariat for the Carbon Market in the Ministry of Finance.

For international professionals dealing with Brazilian operations, several practical points stand out:

• Scope of regulated entities: the law itself sets the thresholds. Operators of installations and sources emitting above 10,000 tCO2e per year must submit a monitoring plan and annual emissions reports; above 25,000 tCO2e per year they must also reconcile their emissions with SBCE assets (Article 30). The managing body may raise these thresholds but the law does not provide for lowering them. Primary agriculture is exempt.
• Offset credits: the SBCE accepts CRVEs for compliance up to a maximum percentage set in each National Allocation Plan. A voluntary carbon credit counts as a CRVE only if it comes from a methodology accredited by the managing body, is independently verified and is entered in the SBCE Central Registry (Article 44). The accreditation of methodologies has not yet been finalised.
• Interaction with the voluntary market: Brazil’s agriculture, land-use change and forestry sectors, responsible for a majority of national emissions according to ICAP, are expected to be a key source of carbon credits, particularly from REDD+ and nature-based projects. The SBCE creates, for the first time, a layer of domestic statutory demand, which could redirect part of that supply inward and affect pricing and availability for voluntary buyers.
• MRV requirements: each annual emissions report must pass a conformity assessment by an inspection body accredited under rules of the managing body before the data are entered in the Central Registry (Articles 32 and 33). Companies operating in Brazil should begin building or strengthening internal emissions measurement capacity now, even before the compliance obligations formally begin.

The most common misconception

The SBCE is frequently confused with Brazil’s existing voluntary carbon market. They are not the same thing. The voluntary market operates without government-mandated caps; buyers purchase credits on a discretionary basis, typically to meet corporate sustainability commitments. The SBCE, by contrast, is a regulated, mandatory system: entities above the emissions threshold have no choice but to participate, and non-compliance carries legal consequences.

Another common error is equating the SBCE with the RenovaBio programme’s CBIOs (Decarbonisation Credits). RenovaBio is a sectoral policy focused exclusively on the fuel distribution chain, requiring fuel distributors to meet individual targets, proportional to their share of fossil fuel sales, by holding CBIOs. The SBCE is a broader, economy-wide cap-and-trade system. While there may eventually be rules governing how CBIOs interact with SBCE allowances, they are distinct instruments created under separate legal frameworks.

Finally, some commentators describe the SBCE as if it were already operational. As of 2026, the system remains in its regulation phase. No allowances have been allocated, no compliance trading has occurred, and the National Allocation Plan has not yet been published. Statements about “Brazil’s carbon price” that reference the SBCE are, at this stage, projections rather than observed market data.

Primary sources: Law 15,042/2024 (Planalto); Decree 12,677/2025 (Planalto); Law 13,576/2017, RenovaBio (Planalto); Ministry of Finance, MRV consultation (28 July 2026); ICAP factsheet; Agência Brasil (27 November 2025).