Carbon credits as a catalyst for regenerative agriculture in Brazil

Owing to the scale of its agricultural sector and the extensive area suitable for regenerative practices, Brazil has the potential to become one of the world's leading soil carbon credit markets. According to Embrapa, approximately 15% of Brazil's pastureland is undergoing degradation and could be restored through regenerative practices. However, the transition toward more resilient and low-carbon agricultural systems will require significant investments to scale the adoption of regenerative agriculture practices.

While the benefits are widely recognized, implementing these practices requires upfront investment, operational changes, and time for adaptation. Therefore, it is essential to expand financing mechanisms and compensation for the environmental benefits producers generate. Key options include premiums in sustainable supply chains, preferential credit lines, and payments for environmental services such as carbon credits.

Already, several carbon market standards have methodologies in place to quantify and monitor increases in soil carbon resulting from the adoption of regenerative practices. Although this market is more advanced in other countries, Brazil is making progress, with the first soil carbon projects already advancing through the stages of validation, monitoring, and credit issuance. The advancement of soil carbon projects in Brazil demonstrates a growing momentum, but realizing the full potential of this opportunity will require continued progress in project development, producer adoption, market demand, and regulatory certainty, while ensuring the environmental integrity that underpins the long-term credibility of carbon credits.

This report was written with coauthors Fernanda Casagrande, Carbon Business Development Specialist, and Roberto Strumpf, Carbon Business Development Senior Manager.