Brazil's government recently announced a plan to create a cap on carbon dioxide (CO2) emissions for large polluting companies and protections for Indigenous communities involved in carbon-offset activities (Bloomberg, Reuters). The cap would apply to companies emitting over 25,000 tons of CO2 equivalent annually; these companies make up 0.1% of Brazilian companies, but produce nearly half of the country's emissions. A level for the cap has not been set yet, but the government plans to gradually lower it annually until emissions are neutralized.

The government expects to send legislation for the plan to Brazil's congress soon (Bloomberg). If passed, the legislation would require two years of emissions monitoring before the cap takes effect. Once in effect, companies could offset their emissions with credits generated from reforestation projects and those cutting emissions faster than required could generate credits to trade with companies not keeping pace (Reuters). The plan, which is part of Brazil's broader efforts to reach carbon neutrality by 2050, also includes a review of tax incentives and measures to end subsidies for fossil fuels (Bloomberg, Reuters).