The carbon market has been in Brazil for nearly 15 years, although it has accelerated in the last 5 years. In 2021, The Guardian published an article criticizing the low quality and governance of carbon credit projects, primarily focused on Africa, but it shook the entire global market.
Since then, two avenues have emerged: one seeks to uncover and cancel these low-quality projects in the market, exactly where the Federal Police are intervening. The other avenue aims to create new standards, new indicators, and a high standard of quality and integrity for the market, bringing transparency and quality to the global market.
In market jargon, the first phase is marked by the so-called “Carbon cowboys,” with low-quality projects, and the second phase is dubbed “carbon market 2.0,” featuring high-quality projects, transparency, and traceability of credits.
The Federal Police dismantled the gang that best represents the first phase of the market, which operated through land grabbing, corruption, and money laundering.
Our report had exclusive access to the Federal Police intelligence report that highlights the illegalities and crimes in the Amazon.
The first phase of the operation, named “Greenwashing,” targeted Ricardo Stoppe, who calls himself “the king of carbon,” and the Ituxi Group.
According to investigations, Ricardo led a criminal organization that fraudulently engaged in land grabbing from public lands through document forgery and corruption of public officials, on which they built carbon and illegal timber extraction projects.
But does the operation stop there?
The report indicates no, and there are more developments ahead.
Market insiders say a well-known Brazilian company will suffer direct impact from the police operation: Carbonext.
According to publicly available documents on the VERRA/VCS Credit Certifier website, Carbonext maintained development relations in three projects linked to Ricardo Stoppe and the Ituxi Group: Fortaleza Ituxi, Unitor, and Evergreen. A report from Mongabsy earlier this year had already warned about the suspected illegality of these projects. access the report
In addition, the company has traded carbon credits from these projects in the market in recent years, with large national and international buyers.
Sources indicate that Carbonext did not have deliberate knowledge of Stoppe’s illegal actions, which is positive. The major challenge will be to disassociate from the strong reputational damage to corporate image, and the wrath of buyers who received these tainted credits, which will also scrutinize their reputations publicly.
Criminally, everything indicates that the new phase of the operation has a clear target: American Michel Greene. Greene developed numerous dubious carbon projects in the Brazilian Amazon and sold millions of credits. Currently, he is more discreet in the country, operating in the Colombian and Peruvian Amazon.
Another name emerging in the report is Moacir Croceta. Unknown to the general public, Moacir is famous in the state of Rondônia, known for having over 1 million hectares of land in the Amazon. Moacir is associated with the Agrocortex project and the carbon credit company BRCarbon, which has projects spread across the Amazon and has environmental activist Mariano Cenamo as an investor, along with his accelerator Amaaz and other investors attracted to the project. This line of investigation will scrutinize carbon projects combined with forest management (logging and timber sales) and projects known as AUD, which are those where the owner theoretically has a prior deforestation license and does not execute it. The way these licenses were obtained is under scrutiny by the Federal Police.
The report also points to the involvement of well-known politicians from the northern region who attempted to regularize land using their political influence. It also mentions the names of large national groups interested in buying these lands, such as the JBS group, owned by brothers Wesley and Joesley Batista. But there is no information whether the operations actually took place.
Experts discuss the effects of the operation on land regularization discussions in the country and on the carbon market.
Regarding regularization, the Federal Police action indicates that legal territorial planning by the Brazilian State is critical for the economic and social development of the Amazon. Despite investments in systems like CAR and SIGEF, these systems do not function and are not capable of providing the security required for this issue. As long as the State does not act, unfortunately, organized crime does not wait. Every day, organized crime has been occupying these spaces.
Current initiatives such as those from the CNJ, local Courts of Justice, and Anoreg may be accelerated to provide greater clarity and reliability in land titling in the Amazon.
In terms of the carbon market, experts interviewed for the report believe that, despite the clear reputational damage to this nascent market, the Federal Police’s work against bad projects and deliberate actions of document forgery and corruption of public officials is a milestone and very important to qualify the market. The market can emerge stronger from this turbulence in the medium term, especially with the regulation of the carbon market in the National Congress. There are more than 50 registered projects in Brazil, including quality projects for both conservation and forest restoration. Additionally, many initiatives from public, private, and third-sector organizations are mobilizing to build a carbon market based on transparency and integrity.
Welcome alternatives could be jurisdictional carbon projects discussed by the Amazon States and forest concessions led by the Brazilian Forest Service for the restoration of federal forests. These types of projects can become a strong trend because they completely remove doubts about the chaotic situation of land ownership in the Amazon, creating more robust projects on public lands.
