Brazil’s SBCE vs the EU ETS: Key Differences for Companies Operating in Both

If your group already reports under the European system and runs plants in Brazil, the SBCE vs EU ETS comparison is not an academic exercise. Lei 15.042, of 11 December 2024, created the Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa (SBCE) on the same cap-and-trade logic as Europe, but the scope, the entry thresholds, the compliance assets and the calendar are different. This guide sets the two side by side using only the official texts, and marks what Brazil has not decided yet.

What the two systems are

The EU Emissions Trading System started in 2005 and is now in its fourth phase, from 2021 to 2030. It applies in all EU Member States plus Iceland, Liechtenstein and Norway. According to the European Commission, it covers around 10,000 installations in the energy sector and manufacturing industry, aircraft operators and, since 2024, maritime transport. A separate system, ETS2, will cover fuel combustion in buildings and road transport. The Commission says it will become fully operational in 2028, and that fuel suppliers, not end consumers, are the regulated entities.

The SBCE exists in law but not yet in operation. Article 1 of Lei 15.042 applies it to activities, sources and installations located in Brazil that emit or may emit greenhouse gases, under the responsibility of an operator. Article 1, paragraph 2, excludes primary agricultural production and the goods and infrastructure inside rural properties directly tied to it. Operators will have to hold assets equal to their emissions at the end of each compliance period (Article 34). Almost everything else is left to regulation that is still being written.

SBCE vs EU ETS: scope and thresholds

Europe defines scope by activity. The Commission’s scope page lists power and heat generation, oil refineries, steel, iron, aluminium and other metals, cement, lime, glass, ceramics, pulp, paper and cardboard, acids and bulk organic chemicals, plus flights within the European Economic Area and shipping. The gases are CO2, N2O from nitric, adipic and glyoxylic acid and glyoxal production, and PFCs from aluminium.

Brazil defines scope by volume first. Under Article 30 of Lei 15.042, operators of installations emitting above 10,000 tCO2e per year must submit a monitoring plan and report emissions. Above 25,000 tCO2e per year they must also carry out periodic reconciliation. The managing body may raise both thresholds (Article 30, paragraph 1), and the obligations only apply to activities for which consolidated MRV methodologies exist (paragraph 2).

Which sectors come in first is not defined. A preliminary sector coverage proposal was presented to the Comitê Técnico Consultivo Permanente (CTCP) in May 2026. The Placar do SBCE lists it as a closed consultation, not a norm. The practical difference: a European installation knows it is in because of what it does. A Brazilian plant will know it is in because of how much it emits, once the MRV rules say how to count.

The assets: EUA versus CBE and CRVE

In Europe there is one compliance asset. Each allowance covers one tonne of CO2 equivalent, and the cap corresponds to the number of allowances issued. Allowances are auctioned or allocated for free using 54 benchmarks (52 product benchmarks and two fallback approaches based on heat and fuel), where each product benchmark equals the average emissions of the best performing 10 percent of installations. For sectors covered by the Carbon Border Adjustment Mechanism, free allocation is being phased out starting in 2026.

Brazil creates two assets. The Cota Brasileira de Emissões (CBE) is a fungible, tradable right to emit 1 tCO2e, granted free or for payment (Article 2, VI, and Article 11). The Certificado de Redução ou Remoção Verificada de Emissões (CRVE) is a fungible, tradable certificate representing a verified reduction or removal of 1 tCO2e under an accredited methodology (Article 2, III). Operators may use CRVEs for reconciliation up to a maximum percentage set in the Plano Nacional de Alocação (Article 12, I, and Article 21, IV). That percentage has not been set.

This is the deepest structural difference. The Commission’s international carbon market page says the volume of international credits usable from 2021 onwards is yet to be defined, so in practice an EU operator surrenders allowances only. A Brazilian operator will be able to surrender a mix of quotas and certificates, within a limit still to come.

Free guide (PDF): Brazil SBCE timeline 2024 to 2031 Download →

Cap, phases and calendar

The EU cap falls by a linear reduction factor of 4.3 percent per year from 2024 to 2027 and 4.4 percent from 2028, with one-off cuts of 90 million allowances in 2024 and 27 million in 2026. The Commission states the cap is set to bring emissions down by 62 percent by 2030 compared to 2005, and that the 2024 cap was 1,386,051,745 allowances. On 17 July 2026 the Commission proposed a targeted revision of the system. That is a proposal, not law.

Brazil has no cap number. Article 21 says the Plano Nacional de Alocação will set, for each compliance period, the emissions cap, the quantity of CBEs, the allocation method and the CRVE percentage. It must be approved at least 12 months before the period starts and estimate the trajectory for the two following periods. The Placar projects the first plan around 2030, with no official date.

Article 50 sets five phases. Phase I: 12 months, extendable by another 12, to issue the regulations. Phase II: one year for operators to set up reporting instruments. Phase III: two years in which operators only submit monitoring plans and emissions reports. Phase IV: the first Plano Nacional de Alocação, with free CBE allocation and market launch. Phase V: full implementation. The law sets no calendar years for Phases II to V. A draft MRV portaria consulted in July 2026 mentions sector dates, but the final text is still pending.

Governance and the MRV cycle

In Europe, operators get the monitoring plan approved by the national competent authority before the monitoring period, submit the emissions report by 31 March of the following year, have it verified by an accredited verifier, and surrender allowances in the Union Registry by 30 September. The rules are Commission Implementing Regulations (EU) 2018/2066 (monitoring and reporting) and 2018/2067 (verification and accreditation). The penalty is 100 euros per tonne of excess emissions, indexed to inflation, and penalised operators are named publicly.

Brazil splits governance in three (Article 6). The Comitê Interministerial sobre Mudança do Clima (CIM) sets guidelines and approves the allocation plan (Article 7). The managing body is the executive, normative and sanctioning arm (Article 8). The CTCP is consultative (Article 9), with a Câmara de Assuntos Regulatórios that must be heard before key rules are issued. The permanent managing body does not exist yet: Decreto 12.677, of 15 October 2025, created the Secretaria Extraordinária do Mercado de Carbono inside the Ministério da Fazenda to exercise those functions temporarily. Decreto 12.768, of 5 December 2025, regulates the CTCP.

The Brazilian cycle mirrors Europe on paper: a monitoring plan per compliance period with prior approval (Article 31), an annual emissions report assessed by an accredited inspection body (Article 32), data entered in the Registro Central (Article 33) and an annual reconciliation report (Article 34). Deadlines, templates and fines are not set.

Step by step for a dual-system company

1. Map every Brazilian installation against the 10,000 and 25,000 tCO2e thresholds using your current Scope 1 inventory, keeping in mind that the thresholds may be raised.
2. Check whether each activity has a consolidated MRV methodology in the draft Brazilian rules. If not, it is outside the obligation for now.
3. Reuse the EU monitoring plan structure as a template, but treat it as a draft until the Brazilian portaria on MRV steps is published.
4. Separate the CBE and CRVE positions in treasury planning. The CRVE ceiling is the variable the Plano Nacional de Alocação will define.
5. Follow the Placar do SBCE for the status of each act, and read the text on Planalto or the Diário Oficial before changing any procedure.

Common mistakes

• Assuming the EU sector list applies in Brazil. The Brazilian law starts from tonnage, not activity.
• Treating Brazilian offsets as freely usable. CRVEs count only up to a percentage that does not exist yet.
• Expecting EU-style free allocation benchmarks. Article 21, paragraph 3, lists technology, marginal abatement cost and historical efficiency as criteria, but no benchmark exists.
• Reading the Phase I to Phase V sequence as a dated calendar. Only Phase I has a duration counted from the law.
• Confusing the temporary secretariat with the permanent managing body. Its mandate ends when the permanent body starts operating.

What to do now

Build the Brazilian inventory at installation level today, because the 10,000 and 25,000 tCO2e thresholds are the only hard numbers in the law. Assign one owner to track the MRV portaria, the sector coverage decision and the first Plano Nacional de Alocação. Keep EU reporting unchanged: nothing in Lei 15.042 alters European obligations, and no linking agreement between the two systems exists. Article 5, VI, of the Brazilian law only allows interoperability with compatible international systems in the future. Revisit this comparison whenever the Placar shows a status change from consultation to published.

Sources

• Lei nº 15.042, de 11 de dezembro de 2024 (Planalto)
• Decreto nº 12.677, de 15 de outubro de 2025 (Planalto)
• European Commission: Scope of the EU ETS
• European Commission: EU ETS emissions cap
• European Commission: Monitoring, reporting and verification of EU ETS emissions
• European Commission: ETS2, buildings, road transport and additional sectors

Read next

• Brazil SBCE tracker: every act with its primary source
• Free PDF guides on carbon markets
• Brazil SBCE timeline 2024 to 2031 (PDF)

Free guide (PDF): Brazil SBCE timeline 2024 to 2031 Download →