The Brazilian government is investing in forest concessions to restore biomes and generate carbon credits, promising billion-dollar profits. However, logistical and legal challenges threaten the success of the model. The safety of the areas and the sustainability of the project are some of the biggest concerns.
Brazil is about to implement a proposal that promises to revolutionize the use of deforested forests.
O federal government and the state of Pará are finalizing a plan that could bring billions in profits to companies, while seeking to restore part of the destroyed biome.
Although the idea seems innovative, it comes with logistical challenges and risks related to safety and sustainability.
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Understand the forest concession project
According to information released by the Folha de S. Paul, the government plans to grant deforested public areas to the private sector with the aim of restoring forests and generating carbon credits.
These credits, equivalent to one ton of carbon absorbed or not emitted, are sold mainly to large corporations seeking to offset their emissions, such as technology companies and energy industries.
The project foresees that companies interested in operating in these areas invest in the recovery of native vegetation and, in exchange, profit from the sale of the carbon credits generated.
To make the model more attractive, part of the revenue obtained will be passed on to the federal and state governments.
Public areas in focus
In the state of Pará, the Triunfo do Xingu Recovery Unit (URTX), an area of 10 thousand hectares, is at the center of the project.
The government has opened a deadline until March 2025 for interested companies to submit their proposals.
The bidding will award the highest bid for a variable grant, that is, the one linked to the annual revenue of the winning company.
At the federal level, the government intends to grant 15 thousand hectares of the Bom Futuro National Forest, in Rondônia, in the first half of 2025.
The goal is that, by the end of the year, around 350 thousand hectares of public forest will be handed over to the private sector.
A risky bet?
Despite its economic potential, the model faces resistance from companies specializing in the carbon market.
According to executives interviewed by Folha de S. Paul, the risks associated with concessions are high.
Many of the lands offered are located in remote areas and are frequently invaded by land grabbers and loggers.
Furthermore, there are concerns about the ability of governments to ensure the security and maintenance of these regions.
Another obstacle is Brazilian legislation, which limits the duration of forest concessions to 40 years, while carbon credits generally require guarantees that the carbon will be retained in the soil for at least 100 years.
Although changes have been made to increase the legal security of contracts, investors still consider this point sensitive.
Logistical complexity
In addition to the legal and security challenges, logistical issues make the project even more complicated. URTX, in Pará, for example, is located 150 kilometers from the nearest urban area.
According to experts, in the event of fires or emergencies, firefighter teams could take up to 10 hours to reach the scene.
There are also high costs for cleaning and restoring the areas. In many cases, deforestation is recent, with large trunks still scattered across the land, which increases operational costs for the companies involved.
Economic potential and revenue models
The project's financial estimates are robust. In Pará, the winning concessionaire is expected to earn up to R$143 million per year from 2042 onwards.
In the federal model, the two lots to be negotiated can generate revenues of up to R$1,2 billion.
However, these projections depend on favorable economic conditions and the existence of buyers for carbon credits.
Fabio Galindo, CEO of Future Carbon, argues that governments should reduce fixed and variable concession requirements to attract more investors.
He also suggests that the National Bank for Economic and Social Development (BNDES) offer financing lines to the winning companies and act as an intermediary in the purchase of credits.
Experience and next steps
According to Nelson Barbosa, BNDES's Planning Director, the bank is modeling the federal notice and should send the final proposal to the Federal Court of Auditors (TCU) in February 2025.
After approval, the government will be able to begin publishing the notice and formalize the concessions.
Renato Rosenberg, director of the Brazilian Forest Service, said that the carbon pricing process was one of the biggest challenges of the project.
“Although this is the first call for proposals of its kind, we have already acquired experience to expand the model to other areas of the Amazon,” he said.
Innovative approach
The concession of deforested forests for restoration represents an innovative approach, but one that depends on solid public policies, legal certainty and financial support to be successful.
If well implemented, the model can contribute to environmental recovery and generate significant profits.
However, the risks involved show that there is still a long way to go before the initiative becomes consolidated.
Do you believe that this concession model can really protect our forests or is it just an economic strategy with little environmental impact? Leave your opinion in the comments!
Excellent 👍🏽 idea as long as the area to be recovered can be accompanied by an equivalent area with intact forest where the concessionaire can benefit from this forest during the concession period
Bad idea, handing over land to foreign companies to make more money, why don't they put Brazilians to work there, planting forests and paying them a salary to do so. Incompetent people hand over everything they can't take care of. They handed over railroads, roads, and they want to hand over ports and forests. Bunch of idiots and incompetents. They can't take care of what's standing and they want to hand over destroyed lands. Spare me so much incompetence. Incompetent and idiotic politicians. It's true that these politicians who are inventing this have received suitcases full of money from companies at their homes. Politicians, stop selling out your country.