It was an enticing offer: Millions of Brazilian reais for doing what they already do for no pay—caring for the Amazon rainforest.— Little wonder that many community leaders in the Kayapó Indigenous Territory in southern Pará state were interested. In December 2022, thirty of them, representing the territory’s seven associations, spent three days in São Paulo at the invitation of Carbonext, which develops carbon credit projects and trades credits derived from forest conservation. During the meetings, the company’s executives proposed a partnership agreement that would give the firm exclusive rights, for at least thirty years, to manage the carbon captured by plants over a territory of some 3.28 million hectares, an area the size of Belgium and twenty-one times bigger than the city of São Paulo. The contract was signed the following month during a meeting held in Kriny village, in the municipality of Bannach. But four months later, in May, Carbonext dissolved the contract. apparently to protect its reputation.

On January 21 and 22 during the meeting in Bannach, attended by the caciques [leaders] of almost all of the more than seventy villages in Kayapó land, they had discussed advanced sales of credits to support the Indigenous territory financially while the carbon project was being drafted and certified—a process that can take up to three years. Indigenous leaders who wanted more time to analyze the proposal were pressured by the majority, who argued the contract presented an opportunity to obtain funds and move away from the illegal mining activities that divide the group. The Kayapó, along with the Munduruku and Yanomami, are among the Indigenous peoples hardest hit by criminal mining, according to a 2022 study by the research network MapBiomas. Like the Munduruku, some Kayapó leaders are involved in illicit mining.

These negotiations prompted Rafael Martins da Silva, a prosecutor with the Federal Public Prosecutor’s Office in Redenção, Pará, to open out-of-court proceedings to investigate the matter. Although he concluded that “in principle” the contract contained no illegalities, he was skeptical about the “true obtention of any free, prior, and informed consent” from the roughly 4,500 residents of Kayapó territory, a procedure defined both in Convention 169 of the International Labor Organization (ILO) and in Brazilian legislation.

In early May, Martins reported that Carbonext had agreed to dissolve the contract until the consultation protocols and Plans for Territorial and Environmental Management of Indigenous Lands (PGTAs) had been drawn up for the Kayapó territory. Under a 2012 decree, PGTAs are mandatory for all Indigenous territories in Brazil, but the dismantling of support structures for Indigenous peoples under the previous far-right presidency of Jair Bolsonaro has delayed implementation of this public policy. In mid-May, Carbonext directors told SUMAÚMA they had dissolved or were in the process of dissolving contracts not only with the Kayapó but also with associations from four other Indigenous territories in states of the Amazon and from marine extractive reserves in northern Pará.

The cancelation of six agreements between one of the largest Brazilian businesses in this field and Indigenous and traditional populations who hold usage rights or concessions to public lands reflects the uncertainties surrounding expansion of the so-called voluntary carbon market in Brazil. This international market is referred to as “unregulated” because it is subject to no government endorsement process and its activities are not recorded as part of official greenhouse gas reduction goals. In the Amazon, lands belonging to the Brazilian state form the last frontier in a race to “reserve” large areas of the rainforest, with the purpose of verifying “avoided deforestation” credits and selling them to companies that want to offset their emissions or improve their image.

Turbocharged by money from banks, investment funds, and big businesses, the dispute has led to a series of accusations about “green land-grabbing”—where private projects encroach on public lands—and contract abuses in negotiations with forest populations. There are dozens of carbon companies in Brazil, some as large as Carbonext and others that don’t even have a website. “It’s like a board game in which intermediaries run around the region disputing who is going to plant their flag in these territories and immobilize carbon stocks,” says Natalie Unterstell, from the Talanoa Institute, dedicated to policies for confronting the climate emergency. “Some would like to have exclusive control over the management and organization of environmental services, even beyond carbon. This is perceived as coercion, and it undermines opportunities that could be of interest to Indigenous and traditional peoples.”

Carbon emissions mainly from the use of fossil fuels but also from the burning and degradation of native plants are primarily to blame for the increase in the planet’s average temperature since the 18th century. This warming has intensified extreme weather events like floods and prolonged droughts and, if not contained, could make life inviable. Carbon credits are issued to businesses that can demonstrate they have reduced their emissions beyond a certain level. Credits can, for example, come from switching energy sources, reusing wastes, reforesting, or conserving endangered forests—the latter is called “avoided deforestation.” The latter is the focus of carbon offsetting in the Amazon. On the voluntary market, credits are verified by private firms. In the case of projects that promise to avoid deforestation, the main certifier is Verra, a multinational based in Washington, DC. Each credit represents one metric ton of carbon that was not emitted. This year, the international price for an avoided deforestation credit has ranged from two to three dollars.

Many champion carbon trading as a modern “green” solution that conjoins capitalism and the protection of nature. Its advocates believe that guaranteeing the forest is more profitable conserved than destroyed is the only way to prevent biomes like the Amazon from reaching the point of no return—a moment fast approaching. The market already understands this as a good opportunity for anyone who wants to continue making money off the very activities that have unleashed the climate crisis. Not by chance, corporations that produce or rely heavily on fossil fuels, such as oil, gas, and aviation fuel, are the biggest buyers of credits on the voluntary market.

For some nongovernmental organizations, the carbon market is yet another loophole capitalism has found for incorporating new areas of exploitation and profiting from the destruction caused by the system itself. Leaders of Indigenous and traditional peoples, accustomed to experiencing a gamut of colonizing attacks on their lands and ways of life, fear they may be deceived and receive nothing but trinkets. Environmentalists express doubts about the integrity of credits, that is, about whether they represent a true reduction in greenhouse gas emissions. Furthermore, since credits are worth more where the forest is more endangered, there is some concern that programmed deforestation may be a way of trying to boost potential profits.

Amid so many controversies, the carbon race is accelerating. The government of Luiz Inácio Lula da Silva must act quickly and energetically, but it has just suffered the gutting of the ministries of the environment and of Indigenous peoples, as Congress stripped both of strategic roles and departments. To address this urgent issue and show what is happening in the Amazon today, SUMAÚMA interviewed more than thirty people, from agents on the carbon market to environmentalists and leaders of Indigenous peoples.

At the request of a nongovernmental organization that wanted to examine the issue from the perspective of the rights of impacted communities, Juliana Miranda, an environmental law attorney with the Brasilia-based firm of Hernandez Lerner & Miranda Advocacia, led a study that surveyed all projects in Brazil that had applied for registry accounts with Verra, the company that verifies carbon credits. The study identified eleven projects in Brazil whose areas totally overlap with public lands of collective use, that is, with Indigenous territories, conservation units ceded to communities, and rural settlements. But not all of the projects, the study points out, disclose the fact that they occupy these areas.

Using the names of the enterprises, project locations, and proponents, SUMAÚMA cross-referenced information and found that of the eleven, two of these projects, lying in the Apuí region of southern Amazonas state, were proposed by private firms claiming to own land that appears on the maps of three state reserves and one federal settlement. This means that private entities may be trying to sell carbon from three areas of public land protected for the purposes of forest preservation and a fourth designated for agrarian reform.

The list also includes four projects suspected of illegal occupation on state land in the city of Portel, in Pará; one project on federal extractive reserves on Marajó Island, likewise in Pará, currently under challenge in federal court by community associations that are claiming damages, in a case reported by Agência Pública in 2021; and one project proposed by the Metareilá association, headed by Almir Surui, in the Sete de Setembro Indigenous Territory in Rondônia—the association applied for a registry account in 2009 but the process was interrupted when internal disputes among the Surui Paiter Indigenous people led to intensified deforestation.

INFOGRAPHY: RODOLFO ALMEIDA/SUMAÚMA

This sampling signals the dubious viability of carbon business in the Amazon, not only given the chaotic land-use situation in the region, where the private appropriation of public lands does great damage, but also given the absence of norms applicable to projects in areas of collective use. Francisco Melgueiro, a forestry engineer, had to face this problem shortly after taking office on May 2 as general coordinator of Environmental Management within Brazil’s federal agency of Indigenous affairs, Funai. Melgueiro says that in principle he doesn’t oppose carbon projects on Indigenous lands: “If done the right way, they can help promote the financial sustainability of Indigenous territories.”

However, Melgueiro has asked associations to “go easy” before signing contracts. “Today, they show up with a ready-made cake and don’t discuss how the benefits will be shared, and this can generate conflict within the community,” he said. “Many times, they’ll come in with the carbon stock calculated, and the equation they’re using is for a different biome—a very serious technical mistake,” he points out. The Funai official is referring to the use of methodologies to calculate credits based on international parameters rather than on data specific to Brazilian forests.

Melgueiro recognizes that communities’ needs for resources makes these proposals attractive. “Some argue that we here at Funai are getting in the way. But we don’t want to block anything; rather, we want to do things correctly, in a way that doesn’t harm Indigenous peoples,” he says. In his assessment, all the contracts signed so far will have to be reviewed while the government draws up a proposal for eliminating this legal vacuum.

According to Melgueiro, Funai knows of at least sixteen agreements involving associations representing Indigenous lands. The prosecutor Daniel Luis Dalberto, a member of working groups on traditional communities and agroecology within the Federal Public Prosecutor’s Office, said there is “a veritable avalanche of contracts, signed and being processed, that were submitted to Funai and ICMbio [Chico Mendes Institute for Biodiversity Conservation] for analysis and possible validation.”

Since the market is unregulated, the total number of agreements finalized for the sale of carbon credits in Brazil is unknown. The contracts identified in the study led by Juliana Miranda do not represent the national total because they only enter the Verra database when an application is filed. Even so, as of March of this year Brazil had eighty-nine projects classified as AFOLU, the acronym for “agriculture, forestry, and other land use.” Of these, sixty-nine were in the Amazon, and maps of the occupied area were available for fifty-six of those.

This made it possible to compare data with federal and state information on the location of conservation units, settlements, territories of quilombolas [descendants of enslaved Africans], Indigenous territories, and unassigned public forests, that is, forests not yet ceded to any community or company, and for this reason a favorite target of land-grabbers. With this comparison, the study identified eleven projects that coincide with areas designated for collective use: six in Pará, three in Amazonas, and two in Rondônia. It also found another twenty-two that partially overlap with public lands, suggesting “situations of potential land conflict.” The study led by Miranda did not enter into details on the latter because “they require a case-by-case analysis.”

On the list of eleven, the two projects in Apuí—a region of the Amazon that has suffered greatly from deforestation—are still waiting for the international carbon verifier Verra to approve their registrations. One of them is Boa Fé, which covers an area of 432,700 hectares and was proposed by the Brazilian firms NRD Desenvolvimento de Recursos Naturais and Ecológica Assessoria. The project submitted to Verra says that “around 81% of the project area is located within three different Brazilian protected areas”: the Aripuanã Sustainable Development Reserve, Guariba Extractive Reserve, and Aripuanã State Forest. All form part of the Apuí Mosaic of Conservation Units, established in 2005 and comprising nine state reserves.

André Manfredini, NRD partner, said the entire area of Boa Fé Fazenda (“fazenda” is a term for a large ranch or farm) is recognized as “private.” He sent SUMAÚMA two certificates that mention the 1912 registration of a “definitive property title” for the fazenda, along with decrees establishing units within the mosaic, which exclude private lands “whose ownership has been proven under the terms of the law.” Manfredini also said there was an agreement with the state to fully preserve the forest that covers the fazenda. He alleges that no traditional populations reside there and that the project is a way to fund maintenance of the forest, which is under assault by loggers and illegal mining operations. “Here a hectare of forest is worth 700, 800 Brazilian reals [USD 150-170]. A deforested area can go for as much as 3,000 Brazilian reals [USD 630] a hectare,” he said. With the project, he believes he can generate credits corresponding to fifty million metric tons of carbon—at two dollars per ton, a yield of one hundred million dollars over thirty years.

Commissioned by the Amazonas state government and published in 2010, a management plan for the Apuí Mosaic mentions six private land titles recognized in the area of the conservation units, stating that, in addition to these, “there is also a certificate from 1912.” The plan doesn’t say what to do about this certificate. Experts on land issues in the Amazon consulted by SUMAÚMA believe that if Boa Fé Fazenda was in fact recognized, it should have been expropriated through eminent domain, or the boundary limits of the conservation units redefined. When asked about it, the Amazonas Department of the Environment did not say whether it is aware of the enterprise or has approved it.

The second project in Apuí currently under validation with Verra is called Samaúma and its area overlaps with the federal lands of the Aripuanã-Guariba Agro-Extractive Settlement Project, of Brazil’s agrarian reform agency Incra. Two firms proposed the project, Terra Vista Gestora de Recursos and Ituxi Administração e Participação. Businessman Ricardo Stoppe appears as the owner of the 71,800-hectare area. In their application to Verra, the proponents admit that “public databases state the existence of a Rural Settlement Project under the authority of the federal agency, Incra, called the Extractive Settlement Project (PAE) Aripuanã-Guariba, which overlaps with the project area.” However, they claim the tract comprises two fazendas that have held definitive land titles since 1933. The project includes copies of documents from Incra itself that allegedly prove private ownership of the fazendas, and it affirms “respect for the boundaries of the private property.”

SUMAÚMA tried to contact those responsible for the project, using the emails and telephones provided in the project description document, but got no response. Incra has yet to advise whether the agency is aware of the business or if it recognizes private ownership of the area. As with the previous case, this recognition would mean the settlement would have to be expropriated or its boundaries redefined in order for the project to move ahead legally.

One of the eleven projects that overlap with areas of collective use is advertised on the website of its proponent, Biofílica, a Brazilian firm that has operated on the voluntary market since 2008. Registered with Verra in 2016, the project lies on land that is part of the Rio Preto-Jacundá Extractive Reserve, a 94,200-hectare state conservation unit in Rondônia. According to its web page on Verra, the venture is a partnership between Biofílica and the extractive reserve’s neighborhood association, with the support of the executive board of the Extractive Reserves of Anari Valley.

Another Biofílica project, not among the eleven, has recently become the target of a challenge by Pará state prosecutor Ibraim Rocha, who told SUMAÚMA that a carbon venture by Jari Celulose and Biofílica includes lands recognized as public by the courts in 2012. According to Rocha, this area—called Saracuruna Fazenda by Jari and the Arraiolos tract by the state—should be designated for traditional communities. Plínio Ribeiro, CEO of Biofílica, said that “there is no dispute” involving the project and that the area in question “has been classified as private since 1856, having been acquired by the Jari Group in 1948.”

Another project on the list of eleven is Juma, on the Juma Sustainable Development Reserve, a state area of Amazonas. It is being developed by the Fundação Amazônia Sustentável (FAS), a private not-for-profit organization that grew out of a partnership between the Amazonas state government and the Brazilian bank Bradesco. In 2008, it became the first project in Brazil to verify avoided deforestation credits for trade on the voluntary market.

Juma is now being recertified by Verra, according to Victor Salviati, Superintendent of Innovation and Institutional Development at the foundation. Victor reports that the income of the 388 families (1,910 individuals) who live in the area has increased sixfold since 2008, three times more than that of the populations in another ten FAS projects that don’t use carbon credits. “The investments raised have allowed us to invest in education and bioeconomy, adding value to açaí, Brazil nuts, and bananas,” he says.

There is also a project registered with Verra that overlaps with the Kararaô Indigenous Territory, Terra do Meio Ecological Station, and Rio Xingu Extractive Reserve, all in Pará. This project hasn’t gone ahead. Proposed by Global Serviços de Engenharia in 2016, it is still in the “development” phase, the first of a multi-stage process leading to registry. On Verra’s website, the area is described as “the largest private forest native to Brazil,” covering 3.5 million hectares. The project submitted to the carbon crediting program was drafted by WMF Energy, a firm with offices in Brazil, England, and Germany.

Alexandre Rosa, founder of WMF Energy, told SUMAÚMA that his company was contracted to draw up the project but was never paid. According to Rosa, the venture was an investment by the U.S. firm Pinnacle, which hired Global Serviços de Engenharia to manage the project. The latter company, in turn, allegedly failed in its attempt to obtain a public land concession. Verra’s website provides no contact information for Global Serviços, and there are several companies in Brazil with the same name. Rosa said his company doesn’t do business on the voluntary market.

People familiar with the carbon business say that many projects count on financing from abroad but work through intermediaries in Brazil, as in this case. The real investors aren’t visible.

Brenda Brito, an associate researcher with the Amazon Institute of People and the Environment (Imazon), warns that there have been so many reports of “green land-grabbing” in Pará over the last ten years because the state canceled a series of property titles to large areas whose legality could not be proven. She mentions the case of Portel. In late January, Pará’s Environment and Sustainability Department canceled 219 registrations within Brazil’s environmental registry of urban properties or CAR, while suspending another 735 CAR registrations connected to carbon contracts. CAR registration, which was created by the 2012 Forest Code, is self-reported and is mandatory for all rural properties, yet it is not sufficient for proving land ownership. Nevertheless, as shown by the Intercept Brazil last November, CAR registration was used in asking Verra to register four projects suspected of illegally using public lands in the region, all connected to the same American businessman, Michael Greene.

The Intercept’s report was based on a study by the World Rainforest Movement, which works to support Indigenous and smallholder struggles. The study showed that of the 714,000 hectares in the projects, 200,000 overlapped territories with state extractive settlements. According to the study, Greene once presided over the Association of Traditional Forest Communities and Residents of Portel, which was founded in São José dos Campos, São Paulo, and was involved in one of the projects. He is also a partner in Agfor Empreendimentos, which executed two of the sixteen contracts with Indigenous associations of which Funai is aware. At the time of the report, Greene denied there was anything illegal in his Portel dealings.

In Brenda Brito’s estimation, “if the land is private and legalized from a land-use standpoint,” it is not appropriate for the authorities to intervene. However, the situation is completely different when it comes to public areas: “It’s not a matter of regulating the voluntary market per se, but of establishing what type of commercial relationship there can be,” the Imazon researcher says. This includes defining the role of institutions like Funai, Brazil’s agrarian reform agency Incra, and the Chico Mendes Institute for Biodiversity Conservation during negotiations with companies, as well as the prerogatives for Indigenous peoples, traditional peoples, and people resettled through agrarian reform.

The Sixth Coordination and Review Chamber at the Federal Public Prosecutor’s Office has opened consultations to draft a technical note on the matter, involving prosecutor Daniel Luis Dalberto. He has worked in Rondônia before, and although he is currently assigned to Rio Grande do Sul, he was sought out by Indigenous leaders from three Amazonian territories who had questions on the carbon proposals. When asked about what would be needed to make these agreements legally valid, Dalberto said that they should “at least” be preceded by a Plan for Territorial and Environmental Management of Indigenous Lands (PGTA), in the case of Indigenous territories, and a Management Plan, for conservation units, with consultation protocols followed in both cases.

The prosecutor also argues that institutions like Funai and the Chico Mendes Institute should be participants to contracts, “whether because they are federal lands used exclusively by Indigenous peoples or because Funai has a legal duty to carry out public policies and defend Indigenous rights, and by the same token because conservation units are federal property, with communities entitled to sustainable use.”

The situation with Carbonext, the company generating the most carbon credits for avoided deforestation in Brazil, shows how complicated it is to maneuver in this market. Founded in 2010, Carbonext received USD 40 million (around BRL 200 million) in funding from British oil company Shell in 2022. The company said it had seventeen ongoing projects, including five with Verra certification.

These projects were developed with seventy landowners, who often joined together to increase the area offered, and with one quilombola association. Unlike other traditional communities, quilombola communities hold their lands under a collective title. For ventures on private lands in the Amazon, owners agree not to deforest the twenty percent of the forest area that they are entitled to clear, according to Brazil’s Forest Code. This is what is called “avoiding planned deforestation”. According to Carbonext, its projects conserve 1.6 million hectares of forest.

The company began negotiations with Indigenous and community associations last year. In exchange for developing projects, it would keep thirty percent of the carbon credits, which is, according to Carbonext, the same commission that private landowners pay. In Pará, partnership agreements were signed not only with the Kayapó but with seven of the twelve marine extractive reserves in the Salgado region, in the state’s north. In Mato Grosso, partnerships agreements were entered into with the Cinta Larga peoples of the Roosevelt Reserve and the Arara peoples of the Arara do Rio Branco Indigenous Territory. In Amazonas, it was the Munduruku of the Coatá-Laranjal Indigenous Territory and in Rondônia the Metareilá association of the Surui Paiter.

As occurred with the Kayapó, the Federal Public Prosecutor’s Office in Pará began administrative procedures related to Carbonext negotiations with associations representing the Tembé peoples of the Alto Rio Guamá Indigenous Territory and the Salgado reservations. In the latter case, the challenge came from these same associations, which wrote a letter to prosecutors accusing the Chico Mendes Institute of blocking an agreement. The Prosecutor’s Office suggested in its response that Carbonext had drafted the letter. Attorneys for the institute believed parts of the contract were illegal, including a clause stating that the company would plan the territory’s oversight and maintenance activities, albeit with the communities being responsible for their execution. According to the institute’s legal team, this would be an invasion of government power.

A contract with the Tembé was never signed by Carbonext. In 2009, this ethnic group had already announced an agreement with the C-Trade company, which offered an annual payment of one million Brazilian reals for carbon credits, but this never came to fruition.

Janaina Dallan, a forestry engineer and the co-founder and CEO of Carbonext, said the decision to break the contracts was made to protect the company, which called Funai and the Office of the Public Defender of Pará as witnesses when rescinding the agreement with the Kayapó. “We understood there was a significant risk of reputational exposure because society has not yet understood the benefit that the carbon credit represents for these communities. There was also substantial regulatory risk and even risk to physical integrity,” Janaina added. “The market is so scalding hot that there are people doing a lot of things wrong.”

According to Luciano Corrêa da Fonseca, a co-founder of Carbonext, the company’s teams were “directly threatened” by miners. “We had a heated debate, but we felt that maturity is lacking [for the initiatives],” he stated. The executive complained about “government attempts at restriction” and “NGOs trying to undermine” project development.

Almir Sanches, the director of Compliance and Traditional Communities at Carbonext who spearheaded negotiations with the Kayapó, echoed this criticism. Sanches, a former federal prosecutor who went from the Public Prosecutor’s Office to the carbon market, criticized what he called government “paternalism” toward Indigenous peoples, which he says “fails to respect” original peoples’ autonomy. He went on to say that prior consultation, “depending on how it is approached, can be paralyzing to communities,” deadlocking their decision process. The invitation to travel to São Paulo was, he says, extended at the request of the Indigenous peoples, who reported being tricked by ghost companies in the past.

Almir Surui, the leader of the Surui Paiter, told SUMAÚMA that the contract with Carbonext was terminated “because it would take too long.” “It needs to be built responsibly, with legal assurance,” he said. The project that Almir began in 2009 took nearly four years until completion. With technical advice from the nongovernmental organization Instituto de Conservação e Desenvolvimento Sustentável do Amazonas (Idesam), credits were sold to the Brazilian cosmetics firm Natura and to Fifa, for the 2014 World Cup. It nevertheless failed in the end due to differences within Indigenous territory.

Almir Surui, leader of the Surui Paiter Indigenous people, who had to deal with community in-fighting because of a carbon project. Photo: Sergio Suruí/Midia Ninja

A later diamond mine discovery on the Sete de Setembro Indigenous Territory led to increased deforestation, making the project impracticable. “It was canceled because of in-fighting, governance, and manipulated by some institutions that are against this model. They said the carbon project was selling the forest, but it isn’t,” the Indigenous leader argued. He is now looking for alternatives on land where he says “housing, education, health, technical assistance for production, nearly everything” is lacking. In his village, support from the federal government’s Amazon Fund was used to build an inn and start an ethnotourism project. “It’s working, but we need to update the territorial diagnostics and decide what the projects of the future will be,” he says.

At the time of its implementation, the Sete de Setembro Indigenous Territory carbon project was met with opposition from the Indigenist Missionary Council (CIMI), which is connected to the Catholic church. Like other organizations, CIMI is against a business that would give companies a “license to pollute” by offsetting their emissions. The council said the carbon trade would distort the Indigenous peoples’ non-capitalist relationship with the environment by subjecting their lives to rules set out by a company. The Terra de Direitos NGO, also a carbon market critic, published a guide on the subject underscoring that contracts interfere directly “in the use, management, and power over territory.” The text goes on to discuss how the clauses of these agreements can limit methods of farming, homebuilding, use of native plants, and other community activities. The organization, which provides legal consulting to fight violations of economic, social, cultural, and environmental rights, warns “the obligations of both parties can interfere with traditional ways of life.”

Amid the controversy, Mariano Cenamo, who is with Idesam, the organization that advised Almir on the 2009 project, defended carbon credit initiatives to drive economic alternatives in the Amazon. “It’s utopic of us to believe that command and control activities alone will be able to support a long-term reduction in deforestation,” Mariano argues. “If this isn’t done in tandem with programs to generate prosperity for a forest-based economy, which will replace an economy based on deforestation, we don’t support it.”

Idesam has a program to boost organic coffee production at an agrarian reform resettlement area of Incra, in Apuí. Eleven million Brazilian reals were raised from investors, who will be repaid in carbon credits. According to Mariano, the idea is to go from ninety families involved to three hundred by 2026. “The pressure to deforest has ramped up so much in Apuí that we saw it wasn’t enough to just plant agroforestry systems and generate income from coffee,” he says. “So we went on to add payments for environmental services and compensation for the deforestation they commit to avoiding.”

This is the second wave of the voluntary carbon market in the Amazon. The first was in the 2010s, after the United Nations created an instrument known as the REDD+, an acronym for Reducing Emissions from Deforestation and Forest Degradation. REDD+ opened up the possibility of compensation for maintaining forest or for reforestation in developing countries. Payments were supposed to be made to governments, but in the end they were also transferred to the voluntary market.

The current expansion was driven by a new combination of factors. The first was the conclusion in 2021, at the 26th United Nations Climate Change Conference or COP-26, held in Glasgow, Scotland, of negotiations on Article 6 of the Paris Agreement on the climate crisis. This article calls for a global mechanism to be established for recording carbon credits. When regulated, it will allow one country to “sell” credits to another when it has surpassed its goal for cutting greenhouse gas emissions. It will also allow for the use of emissions reductions certificates generated by the private sector for deduction from official targets. However, unlike what happens now with credits on the voluntary market, for these projects to be valid, they will need to be approved by the government in the country where they are based.

Secondly, ninety percent of countries have already committed to offsetting all of their greenhouse gas emissions by 2050 or 2060. With this, high-polluting sectors have started racing to purchase credits on the voluntary market.

Finally, in the case of Brazil, the Bolsonaro administration passed laws, norms, and instructions to foster the voluntary market, with no connection to official plans for decarbonization or fighting deforestation. At the time, cabinet members were trumpeting the idea that this market could raise billions of dollars by keeping the forest intact, in a type of outsourcing of government obligations. In 2022, even the Brazilian Development Bank launched two public bids to purchase carbon credits on the voluntary market: one valued at BRL 10 million and the other at BRL 100 million.

The combination of these three factors caused an unprecedented frenzy in Brazil. In addition to the Shell investment in Carbonext, in 2022 Santander bank bought eighty percent of WayCarbon for an unreported sum. In 2021, Ambipar, a Brazilian environmental management multinational, purchased Biofílica. That same year, carbon project developers created the NBS Brazil Alliance (NBS stands for “nature-based solutions”), whose stated goal is to develop good practices in the sector. It serves as an umbrella for twenty-four companies and not-for-profits, with Janaina Dallan of Carbonext serving as its president.

Companies that trade carbon credits as an investment but not necessarily to offset emissions also emerged. “For an immature market like ours this is bad, because the credit is there for a reason: to make the transition to a low-carbon economy,” says Janaina.

Among those specialized in confronting the climate crisis, the dispute for the Amazon’s carbon stores raises a discussion on the voluntary market’s contribution to actually reducing Brazilian emissions.

REDD+ is one instrument used in a variety of formats. It opened the way, for example, for the creation of the Amazon Fund in 2008. This federal initiative receives donations that are supposed to offset the avoided deforestation in the country up to 2012, before forest destruction began to pick up pace again. The fund, paralyzed under Bolsonaro, was reactivated and has been promised new funds from Germany, the United States, the United Kingdom, and the European Union. Although deforestation has increased, these promises represent “good will” towards the new administration, explains Adriana Ramos, a director with Brazil’s Climate Observatory, which brings together one hundred civil society organizations.

Under the Amazon Fund model, avoided deforestation is calculated by kilometers of forest already conserved and is converted into carbon credits for accounting purposes, but these credits are not sold. The methodology used on the voluntary market is different. Instead of considering deforestation already avoided, it is based on a projection of deforestation that could occur if the project did not exist. That is why the greater the threat to an area, the more credits it could generate. It is no coincidence ithat most of these undertakings are located within the arc of deforestation that extends westward from southern Pará. The Apuí region, in southern Amazonas, is a new frontier on this arc.

Shigueo Watanabe, a researcher with Instituto ClimaInfo, provides the following comparison: “If I’m doing a project in the middle of the deforestation arc covering one hectare and if I do one covering the same area on the border with Colombia [where the forest is conserved], the carbon credit volume is completely different. The risk is higher in the deforestation arc, so I’m going to get a higher credit volume. If I’m somewhere far from miners, loggers, I’m not going to get anything, because the deforestation risk for that area is zero,” he explains. “In other words, if I own a REDD project and I want to get thirty years of carbon credits, I have to hope my neighbors continue to deforest for the next thirty years. It’s perverse,” he says.

Watanabe worked with the carbon market in the energy sector and still currently serves on a technical committee for the Gold Standard company, which issues credits for energy projects, but not REDD+ credits. He feels the metric of non-deforested kilometers used by the Amazon Fund is more reasonable. “It doesn’t matter how much carbon there is in the forest; what matters is the forest isn’t supposed to be cut down because it causes global heating,” he says. It would make more sense to him if carbon projects were geared toward reforestation. “It’s not about planting pine and eucalyptus, it’s taking an area, isolating it, and letting the forest grow. This currently provides no income; you can’t get any revenue from helping the forest grow again.”

In January, Verra was questioned about its verification of credits for avoided deforestation by scholars who looked into the program at the request of British newspaper The Guardian. They concluded that ninety percent of these credits did not represent an additional reduction in greenhouse gas emissions – that is, a reduction beyond what could have been had there been no investment in the carbon project. When this happens, there is no benefit to the climate, since the companies purchasing the credits are not in fact offsetting the carbon they emit.

Plínio Ribeiro, who is with Biofílica, said that the report by The Guardian caused a drop in the price of the credits sold by his company. He contested the studies cited by the report but admitted the calculations used in the projects need to be “tropicalized.” According to him, Verra is developing a new methodology for certifying credits for projects that prevent what the market calls “unplanned deforestation” – which in Brazil’s case is illegal deforestation, done outside of what is authorized in the Forest Code. He added that it has hired specialists to develop specific calculations for the states of Acre, Amapá, Amazonas, Pará, and Rondônia.

The Lula administration, under the coordination of the Finance Ministry, has already drafted a bill to create a cap and trade-type market, like those in the European Union, South Korea, and parts of China. In it, there will be a cap on emissions for industries or power plants releasing in excess of 25,000 metric tons of carbon into the atmosphere annually. Companies exceeding their limit will be able to trade credits from those that lowered their emissions beyond what was required. While the bill should be introduced in August, it is unknown whether it would replace any of the three bills on the matter currently being considered in Congress or whether it would be presented as an Executive branch bill. The agribusiness lobby is pushing to enter the regulated market by generating credits from projects that avoid deforestation. With this, they would receive a seal of credibility, making them more valuable.

João Paulo de Resende, a special advisor to Finance Minister Fernando Haddad, said that based on the government’s proposal, companies whose emissions are capped on the regulated market will be able to trade an as-yet unspecified percentage of credits generated by forest conservation or reforestation projects on the voluntary market. To be accepted, these credits will need to be officially registered and follow authority-approved certification methodologies. However, official registration is expected to take two years to implement after the bill is passed. Today, although the country’s goal is to replant twelve million hectares of native forest, the voluntary market is not working with reforestation because of how much longer the results take to appear.

According to the newspaper Valor Econômico, the government intends to include articles in the proposal for a regulated market that are aimed at establishing guarantees for Indigenous peoples and traditional communities in the carbon credit trade. These guarantees should include mandatory free, prior, and informed consultations, defining a rule for dividing and managing the money obtained, and consent from the agencies responsible for public lands. The proposal also states that these populations must be indemnified in the event that third parties use their territories for carbon projects.

What is valid or not in a regulated market is important, because if the credit were sold to a company abroad, this company’s base-country could, in theory, use it to reach their emissions reduction goal. In this case, Brazil will have to make a so-called “corresponding adjustment,” which means not using that reduction in its national accounts.

The shrapnel from the booming carbon business and the creation of a regulated market are just two of the themes Brazil needs to deal with to avoid forest collapse and meet the goal of reducing emissions by fifty percent by 2030, as compared to 2005. That is a lot to do for a government that has been stripped of its management instruments, is under internal pressure, and has just seen its power reduced by a hostile Congress, where the interests of agribusiness and Avenida Faria Lima, the São Paulo thoroughfare that is a symbol of the financial market, frequently align.

The Ministry of Environment and Climate Change, which has just launched an updated version of the Action Plan for Prevention and Control of Deforestation in the Legal Amazon, will also have to update the National Policy on Climate Change. It is also preparing to implement a law for payment of environmental services that was passed under Bolsonaro but was not regulated. This legislation is important to foster the bioeconomy and responding to the demands of the Amazon’s peoples. Ana Toni, the Ministry’s Secretary of Climate, asks: “Indigenous people need to have some compensation for the impressive work they already do. The question is: is the avoided deforestation carbon market the best instrument or could there be others?”

This is just another controversy on top of so many urgent questions involving the forest’s acceleration toward the point of no return. The methods for crimes like land-grabbing, which is deforestation’s sibling, are always being renewed so their perpetrators can continue to appropriate public lands and profit from destruction. For the forest peoples, what is needed now, urgently, is to confront the second and strongest wave of what some analysts are calling “carbon cowboys.” Now, until regulations are enacted, they balance between their frustration with fantastical promises and the fear of getting burned again.