São Paulo, August 30, 2022 – Companhia Brasileira de Alumínio (CBAV3.SA) and Reservas Votorantim will issue the first carbon credits from the Cerrado biome in Latin America. Cerrado represents the second largest biome in Brazil after the Amazon. The issuance is part of the REDD+ Cerrado Project, an Avoided Planned Grassland Conversion grouped REDD (Reducing Emissions from Deforestation and Forest Degradation), of which the first certified area will be “Legado Verdes do Cerrado” (LVC), a private reserve of sustainable development owned by CBA and managed by Reservas Votorantim, located in Niquelândia (state of Goiás).
The certified area covers 11.5 thousand hectares with the capacity to generate approximately 50,000 carbon credits per year. For the first issuance, 316,000 carbon credits will be generated, relating to the period from 2017 to 2021, which will generate revenues of up to US$ 5 million (about R$ 25 million).
The initiative is a milestone in the carbon credit market in Brazil as well as globally, once it unlocks value from forest assets in a deeply threatened biome as Cerrado – one of the most biodiverse savannah regions in the world. Consulting partners ERA (Ecosystem Regeneration Associates) and ECCON Soluções Ambientais contributed to the development of this project in LVC, that aims, among several objectives, to promote and conserve the biome’s biodiversity.
For CBA, founder and sponsor of “Legado Verdes do Cerrado”, sustainability has always been a core pillar of its strategy, guiding its business decisions and long term thinking.
“This initiative is a powerful driver to combine forest conservation and carbon market promotion in Brazil, as well as a path to build a more collaborative approach towards environmental and sustainable development”, said Ricardo Carvalho, CEO of CBA. The company has one of the lowest indexes of carbon emissions in the global aluminum market, but it has committed to cut 40% of its CO2 emissions by 2030.
The Cerrado biome carbon credits were audited and registered by Verra, a global platform that holds the credits custody. Verra created the Verified Carbon Standards (VCS), considered a global benchmark. The methodology used (VM0009) is specific to forests and savannas, applied to planned deforestation (APD), in the context of the biome.
“It took us over two years to study and adapt the methodology, previously only applied in the Amazon, to Cerrado biome. The Program approval by Verra, one of the most respected methodologies globally, represents an important step in Brazil’s consolidation in the international voluntary carbon market”, said David Canassa, director of Reservas Votorantim.
According to Canassa, the carbon credits issuance from Cerrado will not only help large companies around the world to achieve their carbon reduction or net zero goals but will also boost a market with enormous potential. “We are strong believers in the potential of voluntary carbon markets and the REDD+ Cerrado Program will contribute to its maturity and help address such latent global issues”.
Carbon credits sale – The first auction of Cerrado’s carbon credits will be open to receive proposals from August 30th until the end of September. Results will be announced in October. “We expect to reach, mainly, the end users of these credits and will focus on companies that intend to use the credits in their decarbonization strategies”, said João Daniel de Carvalho, business development director at ERA, the consultancy, which together with Carbon Streaming Corporation, is responsible for the auction, as well as being focused on project development of carbon credits and payments for environmental services.
For Yuri Rugai Marinho, partner at ECCON Soluções Ambientais, one of the challenges of the REDD+ Cerrado Project was the growing of agriculture in the biome. “We needed to prove conserving the forest can be also profitable in comparison to other usual activities in the region. It was possible to reconcile a REDD Project in an area of conserved forest surplus, with agricultural production in adjacent areas. The area of surplus native vegetation destined for the project will be set aside for conservation, being protected for at least 30 years”.
According to Hannah Gabriela Simmons, CEO and founder of ERA, the carbon credits in the Cerrado biome will allow local producers to add a complementary activity to agriculture and livestock, diversifying their revenues and helping them to mitigate market risks. “Cerrado concentrates most of the water sources of Brazil’s main river basin. By taking care of this biome and its forest surpluses, we can avoid desertification of Midwest, North and Northeast regions of the country”, said Hannah.
Co-benefits – The Legado Verdes do Cerrado comprises a territory of approximately 32 thousand hectares, the size equivalent to Belo Horizonte city. It represents a relevant remnant of Cerrado in Brazil – about 20% of the area is dedicated to traditional economic activities while the other 80% remains native and conserved.
For the last five years, since it was created, research initiatives have been developed in the area, deepening the knowledge about the biome, in addition to social projects and a full scale nursery for local varieties. “The REDD+ Cerrado Program is an unprecedented initiative when compared to other REDD projects since it starts with upfront co-benefits. They are not a promise, they already exist and will be expanded with part of the profits reinvested”, said Canassa.
Part of the investments will be directed to “Legado Verdes do Cerrado” surrounding areas, scientific research, initiatives focused on biodiversity maintenance and conservation, training to fight forest fires and incentive programs to support new economy businesses. A REDD+ Cerrado management committee will be created to monitor financial planning and funding use.
About Reservas Votorantim
Reservas Votorantim develops nature-based solutions for the green economy. The company manages a private territory of approx. 80,000 hectares in different biomes, where it develops sustainable businesses leveraging on the concept of the multiple use of land and its biodiversity. Reservas Votorantim was founded in 2015 and is wholly owned by Votorantim S.A. To learn more, please visit www.reservasvotorantim.com.br
About CBA
Founded in 1955, Companhia Brasileira de Alumínio (CBA) is a vertically integrated, sustainable producer of high-quality aluminum products. With hydroelectric generation capacity for 100% of its energy requirement, CBA’s operations span from bauxite mining and processing into primary aluminum (ingots, billets, rod and slabs) and semi-fabricated products (plate, sheet, foil and profiles). Working closely with customers, CBA also develops tailored solutions and services for the packaging and transportation markets, helping customers to produce more lightweight, durable, and sustainable products. To learn more, please visit www.cba.com.br
About ERA
ERA is a developer of carbon credits and payments for environmental services projects (PES), seeking alternatives that value the standing forest and ecosystem services of Brazilian Biomes. ERA’s strategy seeks to unite rural property owners and companies in all bioregions of the country in favor of a conservationist agenda, catalyzing the voluntary carbon market as an agent of positive socio-environmental transformation. To learn more, please visit www.erabrazil.com
About ECCON
Founded in 2014, Eccon innovates and strengthens the environmental business and environmental consulting market in Brazil, developing technology and services for the international community, which earned its recognition as one of the main initiatives to mitigate climate change in Brazil in 2018. The company is part of relevant projects for the generation of renewable energy, reforestation, and the generation of carbon credits, which place it as one of the main institutions with a positive impact in the environmental sector. To learn more, please visit https://ecconsa.com.br/