BTAAB: The Making of an Environmental Market

Q&A; with Maria Tereza Umbelino de Souza, Executive Director of BTAAB

On May 18, 2010, World Energy announced a two-year exclusive agreement with Bolsa de Títulos e Ativos Ambientais do Brasil (BTAAB), a company creating new environmental markets in Brazil, to sell millions of carbon credits on the World Green Exchange®. TRANSACT caught up with Maria Tereza Umbelino de Souza, Executive Director of BTAAB, to learn more.

Q: What is BTAAB? Why is it necessary?

A: BTAAB is a company that sells environmental credits in accordance with programs supported by the governments of the states of Goiás, Mato Grosso, and Bahia. These credits are generated by projects that promote biodiversity protection and carbon reduction, helping farmers practice sustainable land management techniques. Today, BTAAB has more than 15 million environmental credit certificates (ECCs) for sale on the World Green Exchange, with 50 million more currently in development. Revenues generated from the sale of environmental credits by BTAAB are directed back to program participants. BTAAB utilizes the environmental standard Brasil Mata Viva (BMV standard), which encompasses REDD, biodiversity and biodiesel projects, serving as a model for a future Brazilian compliance market.

BTAAB is necessary because Brazil needs new, dynamic approaches to engage the population and business interests in preserving the rain forest and reducing greenhouse gas emissions.

Q: What is different about BTAAB from other projects in the area?

A: BTAAB is not a project. It is a company creating the first end-to-end environmental system in Brazil, a "closed-loop" if you like, that "game plans" projects, brings approved credits to market, transacts them, and returns payment directly to the source, the farmers who are engaging in new agricultural approaches to avoid deforestation. We believe BTAAB is providing a possible model for a large-scale national compliance system. That is why we have enlisted the services of global market leaders like World Energy and Markit to ensure our new market performs efficiently, monetizing and tracking our credits.

Q: Can you describe how the new BMV standard works and is applied?

A: Yes, it's an intentionally very thorough process, one we believe will make the credits attractive to Brazilian companies and world buyers. Many of the steps here will be familiar to other standards bodies, as well as to buyers and sellers in the global carbon market. What's different here, however, is that the program is fully integrated and self-contained. Here's a brief overview of the process. Key steps include:

1. BTAAB works with interested farmers, helping them form groups or associations.
2. The Brasil Mata Viva team conducts a survey and initial diagnosis of the overall region's potential and of the environmental assets of the areas within each group or association.
3. Farmers and BMV technicians work collaboratively on a sustainability model to be adopted. The result is the Sustainable Development Nucleus Plan, which is ultimately presented in a Public Hearing, for community buy in, and recognized by the State.
4. An inventory of the environmental assets of the areas is conducted, classifying vegetation, density and soil of the areas to be recorded. A Technical team then surveys the areas' biomass stocks.
5. The data is catalogued and sent to academic institutions for scientific verification and inclusion in the Validation Report. The areas are then catalogued in an environmental registry.
6. All relevant documentation is organized by BTAAB into a dossier and registered by Markit, which then generates a serial number equivalent to the Environmental title.
7. These titles are made available by BTAAB on the World Green Exchange, where the farmers' credits are available for purchase by Brazil's industrials and other global buyers.

Q: Why did you select World Energy and Markit for your new marketplace?

A: Creating a new environmental marketplace from the ground up afforded us many choices and opportunities. So, while we have a lot of confidence in our approach, we knew coming into this that we did not want to have to reinvent the wheel. We know Brazil, we know our people and we know how to develop a program that engages everyone in a win-win proposition for both the environment and the populous. That said, we are not experts in building carbon exchanges optimized for selling millions of credits. World Energy has already done that and does it extremely well. That's why we selected them to power our marketplace. That's also the same reason we brought in Markit. They know how to register and track carbon credits. The two firms together provide us the best infrastructure in the world for posting, selling and tracking our credits.

Q: What kind of reaction to the program are you anticipating from Brazil's business community?

A: A positive one, I am sure. Brazilian businesses will know that when they purchase carbon credits backed by the BMV standard they will be investing in projects that contribute directly to preserving the biodiversity of some of Brazil's most important "biomes," or ecological habitats, including Amazonia, Woodland Savanna, Marsh, Atlantic Forest and Caatinga (a sparse, stunted forest in areas of little rainfall in northeastern Brazil).

Q: What is your biggest hope for BTAAB?

A: That Brazil, its people, and the people of the world can benefit from our collective actions. That the creation of this environmental market will not only heighten awareness of Brazil's biodiversity, but also protect it. And that the means of protecting it, such as avoided deforestation, will also be the spur for economic development -- through the proceeds of the sale of millions of carbon credits -- that will ultimately benefit our rural communities and advance our agricultural and ecological practices.

Meet Our Environmental Market Experts at Carbon Expo

World Energy is proud to be a Gold Sponsor at Carbon Expo 2010, the world's largest conference and trade fair focusing on emissions trading and CO2-reducing projects. We invite all our readers to join us in Cologne, Germany from May 26-28 for this event. You can find us at Booth A-70 or email us at wgx.sales@worldenergy.com to set up an onsite meeting. Also:

• Join us for complimentary drinks and networking at our "Prost! World Energy Networking Event" on Thursday, May 27th at 6pm in Room 1 on the 4th floor.
• Kenneth Ivanic is speaking on the "Carbon Market Oversight: Learning from Experience in Global Markets" panel on Friday, May 28th at 3:15pm.

Supplier Spotlight

World Energy is pleased to announce that BTAAB has listed over 15 million Environmental Credit Certificates (ECCs) as part of the Brasil Mata Viva Project for sale exclusively on the World Green Exchange®.

The Brasil Mata Viva Project is an effort supported by the government to offer local landowners and farmers the means and incentives to avoid the deforestation of Brazil's retreating forests and to promote the development of a sustainable, green economy. A few of the Project's key undertakings include:

• Recomposition of degraded areas;
• The reforestation of the rubber tree and eucalyptus -- ideal not only for carbon sequestration but also for sustainable rubber production and certified wood;
• The development of soy-based biodiesel plants over diesel plants;
• The switch from high-intensity cattle feed plants to semi-intense feed plants;
• And many more transformative initiatives.

Registered users of the World Green Exchange can log-on to access project documentation.

Not yet a World Green Exchange member? Register now to access additional information on these and other available commodities. Registration is free and there is no obligation to purchase.

Questions? Contact an Environmental Markets team member at wgx.sales@worldenergy.com for further information.