Carbon credits have a short lifespan, but they can be used as collateral for financing.

The transition to a low-carbon economy will require an ever-increasing volume of long-term financing. Holders of carbon credits can use them as collateral for financing and loans, thus expanding their access to funding sources.

The guaranteed operation can be project financing linked to decarbonization, but also loans or financing of any other type, or even raising capital in the capital market, such as issuing debentures.

Carbon credits are tradable assets with economic value, representing a reduction in the emission of one ton of carbon dioxide (or the equivalent of other greenhouse gases). For them to be used as collateral, they must have independent certification regarding their origin from a project with additional benefits compared to the existing environmental situation, known as additionality.

Law No. 15,042 of 2024 also created two types of negotiable securities that can be traded on the market and can also serve as collateral: the Brazilian Emission Quota (CBE), which represents the right to emit one ton of carbon dioxide equivalent; and the Verified Emission Reduction or Removal Certificate (CRVE), which corresponds to a carbon credit that meets certain requirements for origination methodology, measurement, and registration in a central registry.

Carbon credits have a short lifespan: they are created with the purpose of being cancelled to offset emissions. This does not prevent their use as collateral, but it requires adequate contractual provisions. For example, the obligation to register the collateral in the Central Registry of the Brazilian Greenhouse Gas Emissions Trading System (SCBE) or in another registry before disbursement, in order to prevent the debtor from cancelling the asset while the collateral persists.

The substitution of collateral is common in project financing and takes into account its various phases. Projects related to the energy transition may foresee the gradual replacement of collateral on carbon credits with collateral on project assets and revenues, thus freeing up carbon credits to offset emissions generated by the project itself in the operational phase.

This can be done right now, with carbon credits generated from high-quality emissions reduction projects that have private certification.