Voluntary carbon market unlocked after nine months: Government publishes essential ordinances next week
Stuck for nine months due to the absence of complementary regulations, the voluntary carbon market is preparing to finally be unlockedwith the Government publishing next week the ordinances that establish the rules necessary for its operationalization, advanced to Express the Ministry of Environment and Energy, led by Maria da Graça Carvalho, promising that this system will come into operation “very soon”.
According to the Expresspublication should have taken place this week, but the Executive decided to postpone it due to the fires that ravaged the country.
Established at the beginning of the year, the voluntary carbon market allows people, companies and organizations to buy and sell credits on an optional basis to offset your greenhouse gas (GHG) emissions and reduce its environmental impact. Entities committed to carbon neutrality, for example, can purchase carbon credits to cover emissions that they cannot directly reduce in their operations.
This diploma aims to encourage the participation of various agents in the market (public or private) through the demand or supply of projects to reduce or capture GHG emissions, such as reforestation, renewable energy, energy efficiency or technologies that remove carbon dioxide from the air. As a rule, one credit is equivalent to the reduction or removal of one ton of carbon emissions.
However, After nine months, the idea still hasn’t come to fruition. Although the decree-law was published in January, for the voluntary carbon market to come into force, other conditions must be created: firstly, a technical monitoring committee for the development and evaluation of methodologies, a platform for recording and transacting credits , and ordinances that define essential criteria for the operationalization of the system.
Without ancillary regulation, the market will not move forward. Adene – Energy Agency confirms this: “We are currently awaiting the publication of the ordinances, provided for in decree-law no. 4/2024, of January 5, which should contain the regulations that will allow the operationalization of the Portuguese voluntary carbon market”. Both Adene and the Portuguese Environment Agency (APA) are involved in this project.
Opportunity or lack of climate ambition?
The regulation of the voluntary carbon market in Portugal continues to spark intense debates, with experts and environmental associations questioning its effectiveness in combating climate change. THE Zeroone of the main critical voices of this system, warns of several weaknesses in the diploma, expressing concern about the “lack of climate ambition” and the risk of greenwashing (false environmental claims).
According to the association, the initiative is transmitting a “wrong signal” by not promoting a real decarbonization effort, as it allows companies to offset their emissions through carbon sequestration projects, such as tree planting. Environmentalists argue that this type of system does not guarantee true climate mitigation and may induce participants to relax their carbon neutrality goals.
“At a time when we urgently need to accelerate the decarbonization process of all economic activities”, Zero cannot identify the purpose. Furthermore, it emphasizes that, without mandatory insurance that can be activated in the event of eventual failures in sequestration projects (which finances safe, permanent and effective carbon sequestration), the market lacks credibility as an instrument for climate action.
The association also considers that this system should not be used to meet already established climate targets, both at national and European level, as the principle of additionalitywhich aims to ensure additional emissions reductions, is compromised. As regards the greenwashing, says it is essential that companies that choose to offset their emissions do so only in relation to residual emissions and within a decarbonization plan.
On the other hand, Tomás Araújo, consultant at Cushman & Wakefield, offers a more optimistic view, highlighting the positive impact that the voluntary carbon market can have on revitalization of abandoned and poorly managed land in Portugal. “This market was created to encourage players to invest in projects that promote carbon sequestration, giving priority to vulnerable or abandoned land”, he highlights.
For the valuation specialist at that real estate consultancy, the strategy will not only give a new life to land without financial use, but will also contribute to the prevention of fires by promoting a more efficient territorial management. The choice of forest species that are more resistant to fires and the creation of vegetation mosaics, instead of extensive monocultures, are approaches that can play a crucial role in fire management.
Despite the potential, Tomás Araújo recognizes that the risk of greenwashing is a legitimate concern and highlights the importance of creating a robust carbon credit registration platform: This “would help prevent double counting of credits and ensure greater transparency”. The expert emphasizes the need for rigorous monitoring of projects to ensure that the promised carbon sequestration is, in fact, being achieved.
In his view, “clear methodologies and certified monitoring are essential”. However, it should be noted that “strict control increases market credibility, but also its costs”. Therefore, adds the person responsible, “it is essential to find a balance” between the efficiency of monitoring and the accessibility of costs for owners and investors.
Regarding the lessons that Portugal can learn from international markets (where the lack of regulation has been one of the main failures, allowing dubious practices and misleading claims of climate neutrality), the expert notes that regulation can help avoid some of these problems, since that clear criteria are defined for the accounting and certification of carbon credits.
