Brazil's senate approved a bill that will create a regulated carbon market, helping to underpin the country's emissions-reduction targets.
The senate approved the bill nearly 11 months after it was passed in the lower house. But the proposal will still need final approval in the lower legislature because of the changes to the text.
The approval was celebrated by the Brazilian delegation in the UN Cop 29 climate summit in Baku, Azerbaijan. The carbon market will give Brazil the financial instruments to help meet its emissions reduction targets, environment minister Marina Silva said. 67pc](http://direct.argusmedia.com/newsandanalysis/article/2628248) by 2035 from 2005 levels, Silva said in Baku.
The legislation creates the Brazilian emissions trading system (SBCE) and stipulates that companies with over 25,000 metric tonnes/yr of emissions will be subject to the cap-and-trade system.
The senate proposal maintained the exemption of the agricultural sector from the cap-and-trade system, but allows companies in this sector to sell carbon credits.
The bill also stipulates that the new system cannot overlap with existing carbon-reduction programs, such as the biofuels carbon credit program Renovabio or the excise tax, which will be created in the tax reform.
The senate stipulated a fine of up to 3pc of gross revenues for companies that fail to comply with emissions reduction targets.
It also removed the requirement that vehicle owners will have to offset carbon emissions, which was included in the lower house proposal.
Congress is expected to approve the bill before year-end, following negotiations with leaders in the senate. Once the bill is signed into law, regulations governing the proposal will still need to be approved by the federal government.
