Carbon market, CBAM, EUDR and the EU-Mercosur agreement: what changes for Brazilian companies
Climate policy and international trade are no longer separate agendas. For a Brazilian company, what happens in the national carbon market, in the European Union's import rules and in the agreement between Mercosur and the European bloc connects directly to costs, market access and data requirements. This text gathers the current state of four fronts, with the sources consulted, and indicates how companies can prepare.
Information current as of September 2026. Several rules are still being regulated, and dates may change.
Brazil's regulated carbon market (SBCE)
The Brazilian Emissions Trading System was created by Law No. 15,042, of December 2024, on a cap and trade model: the government sets an emissions ceiling that falls over time and distributes allowances to companies in regulated sectors, which can trade the surplus. According to the Ministry of Finance (in Portuguese), the planned timeline is:
- 2026: completion of the first-phase secondary regulations, expected in December;
- 2027: start of emissions reporting;
- 2028 and 2029: monitoring plans for operators emitting more than 10,000 tonnes of greenhouse gases a year;
- 2030: full trading phase, with the emissions cap and the National Allocation Plan defined;
- 2031: full implementation.
Industry, energy production and transport are in scope, focused on the largest emitters, and agriculture is outside the cap, although it can generate credits. Regulation is still under consultation and discussion, including the definition of sectors and the rules for monitoring, reporting and verification. For companies, the message is that reliable emissions data will be needed as early as 2027.
CBAM: Europe's carbon border adjustment
The Carbon Border Adjustment Mechanism (CBAM) aims to make the price of imports reflect the emissions embedded in products, in equivalence with what European industries pay. According to the European Commission, it covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. After the transitional period from 2023 to 2025, the definitive regime has applied since January 1, 2026.
The direct obligations fall on the European importer, who needs authorization, must declare emissions and buy certificates. For the Brazilian exporter, the effect is indirect but concrete: customers start demanding emissions data per product, and those who do not provide it may be treated with default values, generally higher than the reality of an efficient operation. According to the Mayer Brown summary of the simplification package adopted in 2025, the sale of certificates starts on February 1, 2027, for 2026 imports, and importers below a cumulative threshold of 50 tonnes are exempt. Sources differ on the date of the first annual declaration, which should be checked in the regulation.
The development of the SBCE matters to this debate, since, in principle, the carbon price effectively paid in the country of origin can be taken into account in the adjustment calculation, with proof.
EUDR: the European deforestation regulation
The European Union regulation on deforestation-free products requires companies to prove that certain products do not come from land deforested after a cut-off date and were produced in accordance with the law of the country of origin. The products include cattle, wood, rubber, cocoa, coffee, soy and palm oil, according to EY (in Portuguese).
After postponements, the rules apply to large and medium-sized companies from December 30, 2026, and to micro and small companies from June 30, 2027. On May 4, 2026, the European Commission published a simplification review that, according to Baker McKenzie, confirms the regulation will not be reopened, estimates a reduction of about 75% in annual compliance costs compared to the original text and proposes product scope adjustments, removing some leathers and adding soluble coffee. For the Brazilian producer and exporter, this means traceability from origin to the production area, with location information, and the ability to answer European buyers.
EU-Mercosur agreement: a trade opportunity with environmental conditions
The agreement was signed on January 17, 2026, and Brazil's Congress promulgated it in March. Provisional application of the trade part began on May 1, 2026, according to Agência Brasil (in Portuguese), and definitive entry into force depends on additional ratifications and on review of the text by the Court of Justice of the European Union.
On environmental matters, the European Commission states that the Paris Agreement is an essential element of the treaty and that the anti-deforestation regulation continues to apply to imported products, according to the official factsheet on sustainable development. Critical analyses, such as that of the Veblen Institute, consider some commitments weakly binding and say the rebalancing mechanism could be used to challenge new environmental measures. Interpretations differ, and the topic should be followed, but the practical message for companies is the same: access to the European market on better terms comes with expectations of climate and socio-environmental compliance.
What the four fronts have in common
Although they have different origins, all start from the same principle: those who want to sell, produce or finance will need to show, with verifiable data, how much they emit and where their products come from. In practice, this means:
- a greenhouse gas emissions inventory, with a recognized methodology and verification capacity;
- traceability of the supply chain, down to the origin of raw materials;
- governance and internal controls that support the numbers;
- consistent communication with customers, financiers and regulators.
How companies can prepare
- Map exposure: is the company's sector in the SBCE scope? Does any exported product fall under CBAM? Do raw materials include EUDR commodities?
- Structure the emissions inventory, defining boundaries, emission factors and owners.
- Organize supply chain traceability and documentation, including the location of production areas.
- Simulate carbon price and compliance cost scenarios for investment decisions.
- Prepare the dialogue with European customers and financiers, anticipating questions on emissions and origin.
- Integrate this data into ESG reporting, so the same set of information serves different requirements.
Questions for your company
- Do we know how much we emit, and could we prove that number to a verifier?
- Has any European customer already asked for emissions or product origin data?
- Do we know the origin of all the raw materials we buy?
- Are there defined owners and deadlines for this agenda, or does it depend on isolated initiatives?
Talk to KICK
KICK Group supports companies with ESG maturity diagnosis, materiality, structuring indicators and emissions inventories, and reporting, including through the B.KICK platform. Get in touch to talk about how these requirements affect your business.
Write to contato@kickgroup.com.br. Sources: Ministry of Finance, European Commission (CBAM), Mayer Brown, Baker McKenzie, EY, Agência Brasil, European Commission (EU-Mercosur) and Veblen Institute. This text is informational and does not replace consulting the official regulations and legal advice.