Carbon credits: oil trader Mercuria seeks profits from controversial forest protection in Brazil

The global standard “J-REDD+” should preserve as much forest as possible while helping to meet the Paris climate targets, according to the UN climate change convention. This new approach to forest protection will result in controversial carbon offset projects becoming even larger – and thus more profitable – than they were three years ago, when the scandal involving South Pole broke, the Swiss carbon project pioneer.

At the forefront of trading these government-issued carbon credits is Mercuria, which likes to present itself as “green” while its main business remains the marketing of fossil climate killers: coal, oil and gas. The Geneva-based commodity giant has entered the offsets business in 2008 and has been developing a J-REDD+ project in the Brazilian state of Tocantins since mid-2023. At COP30 in Belém, it is now canvassing for more partnerships with other Amazonian states.

Meanwhile, the Tocantins Public Prosecutor's Office is considering the possible suspension of the flagship project, as demanded by a dozen associations representing the affected inhabitants and several Indigenous communities. Their complaints focus on a lack of transparency regarding the conditions and consequences of the planned forest protection programme, and manoeuvres by authorities aiming to obtain consent to the project. They say that these issues violate their internationally recognised right to free, prior and informed consent on the use of their natural resources.

A foundation is foreseen to distribute a portion of the revenues to the local population, but its structure has still not been set up. This is especially concerning as the first tranche of carbon credits is due to be sold by the end of the year. Government estimates put the total value of certificates at around CHF 370 million by 2030.

There is also a big question mark over the secret profit margin that Mercuria has secured for itself under the terms of the contract reviewed by Public Eye. This grants the trader a discount of up to 20% on the credits. Additional competitive advantages and conflicts of interest arise because the two companies that calculate their number and structure their sale are 50% and 95% owned by Mercuria, respectively. The Swiss corporation and the regional government have presented the local communities with a fait accompli. While land rights, profit sharing and the actual climate benefits remain unclear, Mercuria has already made certain of reaping a guaranteed profit.

Further information here or from:

Oliver Classen, Media Director, +41 (0)44 277 79 06, oliver.classen@publiceye.ch

Manuel Abebe, Commodities and Trade Policy, +41 (0)77 455 42 34, manuel.abebe@publiceye.ch