What Is the SBCE? Guide to Brazil’s Emissions Trading System

The SBCE (Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa) is Brazil’s national emissions trading system. Established by Law 15,042 of 11 December 2024, the SBCE creates a regulated carbon market based on the cap-and-trade model. It is the largest climate-regulation initiative ever enacted in Latin America, and any company operating in Brazil with significant greenhouse-gas (GHG) emissions needs to understand its rules.

What Is the SBCE and Why Does It Exist?

The SBCE sets an overall cap on the volume of GHG that covered sectors may emit each year. That cap is divided into emission allowances, called CBEs (Cotas Brasileiras de Emissão). Companies that emit less than their allocated allowances can sell the surplus. Companies that exceed their allowances must buy additional CBEs or eligible carbon credits on the market.

The stated objectives, as written in Law 15,042/2024, are to reduce national GHG emissions in a cost-effective manner and to stimulate low-carbon technological innovation across the economy.

Who Governs the SBCE?

Three bodies share governance responsibilities:

• CIM-GEE (Comitê Interministerial sobre Mudança do Clima e Crescimento Verde) sets high-level policy direction.
• SEMC (Secretaria Extraordinária do Mercado de Carbono), created in October 2025 under the Ministry of Finance, coordinates day-to-day implementation.
• CTCP (Comitê Técnico Consultivo Permanente), which formalized its operational structure in May 2026 through four resolutions establishing working groups on financial aspects, monitoring and verification, and project methodologies.

The digital platform that will support registrations, allowance tracking, and transactions is being developed by Serpro, the federal data-processing agency, which began the Inception phase in January 2026.

How the SBCE Works: Cap-and-Trade in Practice

The mechanism follows a straightforward cycle:

1. Cap setting. The government publishes a National Allocation Plan (Plano Nacional de Alocação) that defines the total volume of CBEs available for each compliance period.
2. Allowance distribution. CBEs are distributed to regulated entities through free allocation, auctioning, or a combination of both. The exact rules are still under secondary regulation.
3. Monitoring, Reporting, and Verification (MRV). Each regulated entity must submit a Monitoring Plan, track its emissions according to approved methodologies, and have results verified by accredited third parties.
4. Compliance. At the end of each compliance period, entities must surrender enough CBEs (or eligible offset credits) to cover their verified emissions. Shortfalls trigger penalties defined by regulation.

Who Does the SBCE Apply To?

Law 15,042/2024 defines two tiers based on annual emissions:

• Reporting obligation: facilities emitting 10,000 tCO₂e per year or more must report their emissions to the SBCE managing body.
• Compliance obligation (cap): facilities emitting 25,000 tCO₂e per year or more must hold and surrender CBEs to cover their emissions.

In principle, the system covers all sectors of the economy. Agricultural activities are explicitly exempt. The forestry and land-use sectors are not expected to be placed under the cap but may generate eligible offset credits.

Sector Phase-In Schedule

On 19 May 2026, the Ministry of Finance released a preliminary proposal for sectoral coverage. MRV obligations are being introduced in three waves:

• Wave 1 (2027): cement, primary aluminum (including alumina), integrated steelmaking, oil and gas exploration and production, oil refining, pulp and paper, and air transport.
• Wave 2 (2029): secondary aluminum, semi-integrated steelmaking, chemicals, mining, food and beverages, waste management, sewage, ceramics, glass, and the electricity sector.
• Wave 3 (2031): road, rail, and waterway transportation.

Within each wave, the MRV calendar follows three annual stages: A1 (submission of the Monitoring Plan for approval), A2 (start of effective emissions monitoring), and A3 onward (full monitoring and annual emissions reporting).

Implementation Timeline

Law 15,042/2024 defines four consecutive implementation phases:

The government has stated that it aims to finalize all secondary regulations by December 2026. The public consultation on the MRV timeline closed on 28 August 2026. The regulated market is expected to become fully operational by 2030.

Step-by-Step: Preparing Your Organization

1. Determine your emissions tier. Calculate your facility-level annual GHG emissions using the GHG Protocol or equivalent methodology. If you are above 10,000 tCO₂e, you have reporting duties. If you are above 25,000 tCO₂e, you will face compliance obligations.
2. Identify your sector wave. Check the preliminary sectoral coverage proposal published by the Ministry of Finance (May 2026) to see when MRV obligations begin for your industry.
3. Build internal MRV capacity. Designate a team or hire external consultants to develop your Monitoring Plan. The plan must follow methodologies approved by the SBCE managing body.
4. Engage an accredited verifier. Third-party verification of emissions data will be mandatory. Start identifying accredited verification bodies early, as demand will increase sharply once Wave 1 begins.
5. Model your financial exposure. Estimate the cost of compliance under different carbon-price scenarios. Factor in the possibility of purchasing CBEs at auction or on the secondary market.
6. Track regulatory updates. Follow publications from the SEMC and the CTCP. Secondary regulations are still being finalized, and details on penalty structures, banking and borrowing rules, and auction formats will shape your compliance strategy.

Common Mistakes to Avoid

• Assuming agriculture means all agribusiness is exempt. The law exempts agricultural activities specifically. Processing, logistics, and other downstream activities linked to agribusiness may still cross the emissions thresholds and fall under the SBCE.
• Waiting for the cap to start before acting. MRV obligations begin years before the compliance cap takes effect. If your sector is in Wave 1, you need a Monitoring Plan submitted by 2027.
• Confusing voluntary credits with CBEs. Voluntary carbon credits and CBEs are different instruments. The law allows certain offset credits to be used for compliance, but eligibility rules and limits have not yet been finalized. Do not assume that voluntary credits you already hold will automatically count.
• Ignoring scope boundaries. The SBCE regulates at the facility level, not the corporate level. Companies with multiple facilities must evaluate each one independently against the emissions thresholds.
• Relying on outdated information. Secondary regulations are still in progress. Always consult the official texts published by the Ministry of Finance and the SEMC rather than relying on summaries that may not reflect the latest changes.

What to Do Now

If your company operates in Brazil and emits more than 10,000 tCO₂e per year, the SBCE is already relevant to your planning. The regulatory framework is being built right now, and companies that engage early will have more time to optimize their compliance strategies and reduce costs.

Start with three concrete actions: (1) run a facility-level GHG inventory if you have not done so recently, (2) map your sector against the phase-in schedule, and (3) assign internal ownership for SBCE compliance. The official texts of Law 15,042/2024 and all secondary regulations are published on the Ministry of Finance SBCE page.

The window between now and the first compliance period is the most valuable time your organization will have to prepare. Use it.