Vale, Braskem to enter cap-and-trade simulation in Brazil
By Marcelo Teixeira
SAO PAULO, March 13 (Reuters) - Some of the largest Latin American corporations including mining company Vale and financial conglomerate Itau Unibanco, will take part in a nine-month simulation of a cap-and-trade system in Brazil starting on Friday.
The experiment, organized by think-tank Fundacao Getulio Vargas (FGV) and Rio's green exchange BVRio, aims to familiarize companies operating in Brazil with the system, which could be adopted in the country in the future.
A total of 22 companies operating in Brazil, including Latin America's largest bank Banco do Brasil and America's biggest petrochemical Braskem, will participate in the simulation.
"This will be important to improve the systems, looking at a real carbon market that could be adopted by Brazilian states or the central government," said Mauricio Moura Costa, director of BVRio, the Rio-based exchange for environmental assets.
A cap-and-trade system works by setting a hard cap on the amount of greenhouse gases (GHG) that a sector or a country emits.
Businesses surrender emissions allowances distributed or sold by the regulator to stay within the caps. They can also trade those permits with other companies at a price determined by the market.
Carbon offset credits from projects that reduce emissions can also be bought and used to help companies to comply.
All the 22 companies taking part in the exercise regularly report their emissions in Brazil. Continuación...