Brazil hopes to assume a leading role in global carbon trading emissions

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[RIO DE JANEIRO] A new loans and grants scheme in Brazil will fund company initiatives that help reducing carbon emissions through the Kyoto Protocol's Clean Development Mechanism.

Projects and research that help remove greenhouse gases from the atmosphere or reduce their emissions will be eligible for the scheme, the first private sector financing programme of its kind in Brazil.

The Ministry of Science and Technology unveiled the US$37 million scheme, which will run until 2009, on Tuesday (12 December).

The Clean Development Mechanism (CDM) was established last year to encourage sustainable development in developing countries. It allows industrialised countries to earn emissions credits by investing in emission reduction projects in developing countries.

The Brazilian scheme offers loans to support research studies on the viability of future CDM projects, and to finance the implementation of new technologies that help to reduce greenhouse gases in the air.

Eligible projects must cost a minimum of US$233,000. The Research and Projects Financing (Finep), a public agency linked to the science ministry, will cover 90 per cent of the costs. The companies will have to repay the loan within 10 years of receiving it.

The scheme will also offer grants to cover up to 50 per cent of projects carried out by medium-sized and large companies in partnership with scientific and technological institutions.

Proposals for the grant must relate to new technologies or research on emissions monitoring and assessment, with a minimum cost of US$140,000. To receive the funding, companies should cover at least half of the project's total value, and the project must be completed within two years.

Fabrício Brollo, head of Finep's Agribusiness Department, said Brazil has a leader role in the CDM sector.

"The country ranks second in its potential in carbon trading, only behind China," said Brollo, adding that the total carbon credit market in Brazil, between now and 2012, is estimated to be worth US$1 billion.

He told SciDev.Net that the government expects a strong response to the scheme.