Over the past several years, Brazil’s image has been tainted through the practice of deforestation. To improve their environmental standing, Rio de Janeiro has made plans to establish a specialized exchange that will trade environmental assets.

According to Chicão Bulhões, Rio de Janeiro’s Secretary for Economic Development, their goal is to create tax incentives to fuel this market, consolidating the world’s most accepted regulatory standards to provide its framework. The plan is to launch by the end of the year.

“Brazil will be one of the biggest players in this market, which, as it is voluntary, has global reach. Companies around the world can buy credits to offset their emissions from anywhere else.”

With the global carbon market anticipated to reach $22 trillion by 2050, the city’s desire to tap into this can drive growth even further.

Bulhões hopes that as companies worldwide purchase credits to offset their own carbon emissions, Rio de Janeiro’s economy will strengthen, all through low-carbon initiatives, such as reforestation, seed, fertilizer production, and more.

The goal of this exchange goes beyond just the carbon credit industry. Bulhões has said they “Want to attract agents interested in trading all environmental assets, such as reverse logistics credits and environmental reserve quotas, which have great potential.”

Rio de Janeiro hosted the ECO 92 meeting that prompted the UN framework on climate change, which resulted in the Kyoto Protocol and the Paris Agreement. The city has celebrated these initiatives every 10 years since. As such, Bulhões believes this credit exchange is the natural next step. He hopes this will expand into Brazil as the country takes measures to combat the damage done to the Amazon rainforest.

In Brazil, the Amazon rainforest lost 10,129 square kilometers in 2019 – an increase of 34% from 2018 – and 11,088 square kilometers in 2020.