Brazil, China Eye Climate Finance Breakthrough by COP31
Brazil and China are in advanced talks to establish a bilateral carbon market agreement, with a potential announcement by COP31 in November. This deal could see China purchasing Brazil's Internationally Transferred Mitigation Outcomes (ITMOs), unlocking significant climate finance for Brazil. Such a partnership is crucial for global climate action, connecting two major emerging economies and fostering sustainable development. This collaboration underscores the urgent need for international partnerships to accelerate decarbonization efforts worldwide.
Brazil is actively pursuing a groundbreaking climate partnership with China, aiming to finalize a deal for carbon credit sales possibly by November's COP31 summit. Brazilian officials are discussing how China could purchase Brazil's Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 of the Paris Agreement. This collaboration is crucial for global climate action, potentially directing significant climate finance to Brazil for sustainable development and new technologies.
This would be a first-of-its-kind bilateral ITMO trading agreement for China, according to Reuters. For Brazil, it's a key part of building its own regulated carbon market, the Brazilian Emissions Trading System (SBCE), and establishing rules for international transfers. This move aligns with the urgent need to fund global emissions reductions.
ITMOs are more than just carbon credits; they are official government-to-government transfers designed to help countries achieve their climate targets. Strict accounting ensures each emission reduction is counted only once, upholding the integrity of global efforts to reduce greenhouse gases. Brazil, with its rich potential for nature-based projects like Amazon forest conservation, is a significant supplier of these high-quality reductions. However, it must balance these exports with its own ambitious climate goals. As Ana Paula Cavalcante, Brazil's deputy secretary, highlights, these partnerships can "unlock investment flows for Brazil" for green reindustrialization.
China's expanding national emissions trading system, already the world’s largest and covering over 60% of its carbon emissions from major industries, makes it a powerful and consistent buyer. Its plans to further broaden this market by 2030 underscore a growing demand for credible emissions reductions, vital for combating rising global temperatures. In 2025, China's national emissions trading system covered 3,378 companies.
Broader cooperation is also underway. Brazil, China, and the European Union are part of the Open Coalition for Regulated Carbon Markets, working to harmonize rules for measuring and tracking emissions. This effort is essential to simplify future carbon credit trading and ensure transparency. The success of any deal depends on high-integrity credits—real, measurable, and properly accounted for—which are fundamental for environmental protection and trust in the global carbon market.
While a COP31 announcement would be foundational rather than an immediate surge in trading, linking Brazil’s extensive potential for emissions reductions with China’s vast market demand could inspire other developing economies. It offers a clear path for financing decarbonization efforts worldwide, accelerating the urgent transition to a sustainable future.