BNDES signs a cooperation agreement facilitating the first concession project aimed at the restoration of degraded areas with revenues from the sale of carbon credits
Forest concessions were introduced into the Brazilian legal system through Law 11284/2006 (Public Forest Management Law – LGFP) with the support and enthusiasm of various sectors of society, especially environmental NGOs, however, almost two decades after the publication of the law, there are currently only 18 federal public forest concession agreements executed.
According to information from the Brazilian Forest Service (SFB), Brazil currently has 327.3 million hectares of registered public forests[1], which accounts for about 38.4% of the domestic territory, however, only 1.05 million hectares are subject to concession agreements, that is, only about 0.32% of the forest territory.
Forest concession is a modality of forest management, which gives the government the possibility of delegating, through financial burdens and legal obligations, to interested parties and winners of bidding processes, the management of forests located in areas owned by the government, whether of the Federal Government, States, Cities or the Federal District[2].
Upon execution of a concession agreement, the ownership of the land remains with the public entity while allowing individuals to exploit wood and non-timber products such as oils, fruits, resins, ornamental plants and medicinal plants, in addition to the residual woody material from the exploration and services of hosting, visitation, nature observation, and adventure sports.
Such activities are considered to have a low environmental impact and seek to generate income while keeping the forest standing. However, despite the potential to yield a large volume of products and jobs, in addition to revenues for the government and the private sector, the profile of concessions is currently mostly wood management by small and medium-sized companies[3].
However, this market faces some challenges to becoming competitive, especially the great competition with the market for illegal and predatory logging in forests, in addition to the need for high investments in infrastructure and logistics, as current concessions are concentrated in areas that are difficult to access in the Amazon biome.
Nonetheless, in an attempt to change this scenario, BNDES, manager of federal forest concessions, signed in May this year an agreement with the Brazilian Forest Service (SFB) and the Inter-American Development Bank (IDB) seeking to enable forest concessions to address not only the sustainable management of forests, but also to seek their restoration[4].
Law 11284/2006 prohibited the sale of credits arising from the avoided emission of carbon in natural forests, however, through Law 14590/2023, the wording of Paragraph 2 of Article 16 of LGFP now states that, “except for areas occupied or used by local communities, the concession agreement may provide for the transfer of ownership of carbon credits from the granting authority to the concessionaire, over the concession period, as well as the right to sell certificates relative to carbon credits and associated environmental services, under the terms of the regulation.”
Through the cooperation agreement signed, BNDES will support new concession projects, such as the Bom Futuro National Forest, which is located in the State of Rondônia, and Gleba João Bento, located on the border between the States of Rondônia and Amazonas, each amassing 17,000 and 55,800 hectares of accumulated deforestation.
According to information from the BNDES News Agency, this will be “the first concession project to restore a degraded area with revenues from the sale of carbon credits or forest products generated from reforestation.”
Thus, a different path is offered, instead of just maintaining the standing forest with its sustainable use, the new projects seek to enable greater economic attractiveness, insofar as reforestation and forest restoration will generate income from the sale of carbon credits, which is an activity explored by an international market, thus harnessing the existing value and interests, and having the potential to become an important source of revenue, especially for countries that have large green areas, such as Brazil.
In addition, obtaining revenues through carbon credits from forest restoration may increase concessions outside the Amazon biome, where the vast majority of concessions are currently located[5], spreading throughout the country.
The signing of the cooperation agreement has great potential to change the current situation of forest concessions, stimulating private interest through the generation of new income, in addition to helping achieve the climate neutrality undertaken by Brazil through the Paris Agreement.
[1] https://www.gov.br/florestal/pt-br/assuntos/cadastro-nacional-de-florestas-publicas/cadastro-nacional-de-florestas-publicas-atualizacao-2022/cnfp-2022
[2] https://www.gov.br/florestal/pt-br/assuntos/concessoes-e-monitoramento/o-que-e-concessao-florestal/perguntas-frequentes-sobre-concessao-florestal
[3] https://hubdeprojetos.bndes.gov.br/pt/setores/Florestas
[4] https://agenciadenoticias.bndes.gov.br/detalhe/noticia/BNDES-assina-acordos-com-SFB-e-BID-para-projetos-de-concessao-de-florestas/
[5] https://hubdeprojetos.bndes.gov.br/pt/setores/Florestas
Available in: https://valor.globo.com/brasil/esg/artigo/creditos-de-carbono-e-a-restauracao-de-florestas-publicas.ghtml
Autor: Fernanda Regina Negro de Oliveira • email: fernanda.oliveira@ernestoborges.com.br
