PORTUGAL Trends and Developments Contributed by: Assunção Cristas, Catarina Pinto Correia and Carolina Vaza, VdA
• ensure transparency and trust in carbon markets through disclosure requirements and interoper - ability between their platforms, avoiding double counting of credits; and • ensure environmental integrity by promoting asso - ciated biodiversity benefits while avoiding green washing. The Regulation is voluntary; however, it is likely that the demand side of the carbon markets will move towards favouring credits issued under the Regula - tion. Credibility will be key to the growth of this mar - ket, and carbon removal/reduction tokens that comply with the rules will benefit from enhanced credibility. The certification system established by the Regula - tion in question does not directly apply to the car - bon credits themselves, but rather to the certification frameworks, or carbon markets, through which these credits are issued and recorded. Recognition of these certification frameworks is granted by a decision of the European Commission, which evaluates whether the market’s rules are robust enough to ensure that the carbon projects and credits admitted to the framework comply with the Regula - tion’s standards and thus merit the associated cred - ibility. These certification frameworks are obliged to submit annual reports to the Commission, providing ongoing oversight and transparency. Certification is granted for a period of five years, after which it must be renewed with the Commission to maintain its valid- ity. This process ensures that only those frameworks consistently meeting the required criteria retain their certified status. The Regulation’s structured approach to certification, which flows from the Commission down to each individual carbon credit, is designed to safeguard the quality and integrity of these climate change instruments within the European Union. This chain of certification aims to instil confidence in the environmental effectiveness of carbon credits and the markets in which they are traded. Conclusion While the European and the Portuguese regulation on voluntary carbon markets share the same concerns on high integrity and credibility, rooted in certified methodologies, independent certifiers and public
registration, the legal options differ slightly, since the Portuguese regulation is broader and more open to innovation. Although the priority, as reflected in the Decree-Law, is attributed to methodologies concern - ing the forestry sector (namely as a way to prioritise areas devastated by wildfires) and blue carbon pilot projects, the law allows any interested party to pro - pose new methodologies in any field. This makes it possible to attract innovative methodologies and sub - sequent projects. As for the use of carbon credits, the Portuguese leg - islation again is more open and does not impose the sole compensation of residual emissions, most pos - sibly anticipating a trend that could already be fore - seen. The recent regulatory advancements in Portu - gal’s voluntary carbon market reflect a decisive move towards establishing a robust, transparent, and cred - ible framework for carbon trading. The creation of the Climate Agency and the publication of key ordinances in 2024 demonstrate the government’s commitment to aligning national policy with broader European Union climate objectives. By instituting clear rules for market operation, project verification, and the management of carbon credits, Portugal is positioning itself as a pos - sible market mover in the development of voluntary carbon markets within the EU. This regulatory clar - ity is expected to foster greater investor confidence and encourage the participation of a diverse range of market agents. Looking ahead, the Portuguese voluntary carbon mar - ket is likely to experience increased activity and inno - vation as the regulatory framework matures and oper - ational details are clarified. The ongoing development of supporting infrastructure, such as the public plat - form and the finalisation of insurance requirements, will be critical in ensuring the market’s resilience and adaptability. Additionally, the alignment with EU-wide sustainability goals and the potential for interoperabil - ity with external marketplaces suggest that Portugal’s approach could serve as a model for other jurisdic - tions seeking to balance environmental ambition with economic opportunity. As the market evolves, contin - ued attention to regulatory coherence and inclusivity will be essential to sustaining growth and maximising the environmental impact of carbon trading initiatives.
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