During the third Conference of the Parties (COP3) to the United Nations Framework Convention on Climate Change (UNFCCC) in 1997, numerous countries ratified the Kyoto Protocol. This document established the mechanism currently recognized as the carbon market, facilitating the trading of carbon credits generated through emission reductions or the removal of carbon dioxide from the atmosphere. The objective of this instrument was to incentivize inreductions of greenhouse gas (GHG) emissions by assigning a monetary value to carbon.

Today, there are several methods for trading carbon, divided into two main segments: the regulated market and the voluntary market. One regulated-market approach is cap-and-trade, in which a country, region, or state creates markets by setting a GHG emissions-reduction target. This target is divided among different sectors, with each sector having its own emission limit.

Consequently, organizations that emit greenhouse gases (GHG) exceeding the prescribed threshold are required to trade emission allowances (emission unit allowance) from other entities within the same sector that emit below the permissible limit. If this threshold is surpassed, it is possible to acquire carbon credits generated by emission-capture projects or by avoided emissions. Certified Emission Reductions (CERs) are generated in accordance with methodologies established by the Clean Development Mechanism (CDM), which are overseen by bodies under the United Nations Framework Convention on Climate Change (UNFCCC).

In November 2024, Bill 182/2024 was enacted in Brazil, establishing the Brazilian Emissions Trading System (SBCE), a regulated carbon market within the country based on the cap-and-trade model. This legislative framework has been under discussion for several years and is scheduled to commence full operation in 2030. It stipulates that corporations that emit more than 10,000 tons of carbon dioxide (CO₂) annually shall be required to submit plans and reports on their emissions; however, these entities will not be subject to the restrictions imposed by the new legislation.

Entities that emit more than 25,000 tons of CO₂ annually are required to comply with comprehensive regulations, including the obligation to mitigate their emissions. These entities must possess sufficient Brazilian Emission Quotas (CBEs) to cover their yearly emissions, in accordance with the National Allocation Plan. Once the available CBEs on the market are exhausted, entities exceeding these limits must offset their emissions by acquiring Verified Emission Reduction or Removal Certificates (CRVEs), up to a maximum percentage that has yet to be determined.

The pulp and paper sector will be affected in two ways by the new legislation: through industrial emissions and carbon removals in forests. The former will require companies in the sector to maintain sufficient CBEs to offset their annual emissions and to develop comprehensive long-term emission-reduction strategies. The second will permit these removals to be used to set measures based on net emissions calculations and to offset within the regulated market, provided that the carbon credits are properly accredited and converted into CRVEs.

The voluntary market additionally utilized the instrument established under the Kyoto Protocol, particularly through the CDM and the methodologies proposed for climate change mitigation. This framework permitted not only regions but also various entities, such as non-governmental organizations (NGOs) and the private sector, to generate credits. The goal of these carbon credits is to voluntarily reduce emissions.

The primary proponents of methodologies and certifiers include Verra's Verified Carbon Standard (VCS), the Gold Standard, Social Carbon, the Global Carbon Council (GCC), and the United Nations Framework Convention on Climate Change (UNFCCC) 's CDM. Carbon credits and certified emission reductions are subject to independent verification by third-party auditors with no affiliations to the UNFCCC.

In 2021, at the 26th United Nations Climate Change Conference (COP26), the Rulebook for Article 6 of the Paris Agreement was finalized. This framework regulates the international carbon market and establishes guidelines for international cooperation to achieve climate targets, such as Nationally Determined Contributions (NDCs). Since then, the participating parties and the designated supervisory body have been engaged in detailed discussions to refine the implementation rules, including criteria for validation and verification, as well as the transition of projects from the old CDM. Nonetheless, certain challenges persist, notably the integration of national and international registries and the operationalization of greenhouse gas removal activities, both of which remain unresolved.

In December 2024, COP29 was held in Baku (Azerbaijan). One of the goals of the meeting was to follow up on the operationalization of the global carbon market. Among the conference's achievements, Brazil announced its NDC, committing to reduce its GHG emissions by 59%-67% by 2035. A large part of these reductions will come from combating deforestation and decarbonizing the economy.

Furthermore, Article 6 of the Paris Agreement has been ratified, delineating the mechanisms by which nations may collaboratively finance decarbonization initiatives. As stipulated in the agreement signed in Baku, it was concurred that one country may procure emission reductions from another to aid in achieving its national climate objectives. Consequently, nations with higher emission-reduction costs can meet their targets by investing in actions in countries with lower costs. These transfers will occur through two modalities: either via direct agreements between countries (ITMOs - Article 6.2) or through purchases from private entities (A6.4ERs - Article 6.4).

In 2025, Brazil solidifies its position as a leading participant in the global climate agenda by hosting COP30 in Belém, Pará, marking the first UN climate conference held in the Amazon region. The event marks a pivotal moment: after years of negotiations, emphasis is now placed on the effective implementation of commitments and the integration of carbon markets. In this regard, the Brazilian government approaches the conference with the Brazilian Emissions Trading System (SBCE) in the regulatory phase, establishing a foundation for a resilient national market that adheres to international MRV (monitoring, reporting, and verification) standards.

Carbon credits at Suzano

In 2021, Suzano established its process for developing carbon projects by evaluating potential sites for eligibility, assessing the applicability of methodologies, and adapting internal procedures for the implementation and monitoring of initiatives. This ensured compliance with fundamental requirements, such as additionality, the assessment of non-permanence risk, the identification of unusual practices, and the prevention of displacement of polluting activities.

Furthermore, the company established a network of external contacts with prospective clients, partners, and interest groups, thereby enhancing its representation in associations and forums that shape the rules of global carbon markets.

Priority was given to developing the initial project within the scope of plantation expansion in the state of Mato Grosso do Sul. In 2022, the company completed the design of the Horizonte Project, situated in Três Lagoas (MS). The Reforestation Project underwent an audit by an independent third party for validation and verification purposes and was subsequently submitted for final registration on the Verra platform.

It is essential to recognize that, in addition to addressing climate change, the project yields social and environmental benefits. The outcomes derived from these co-benefits may include improved air quality, water regulation, biodiversity conservation, waste management, income generation, and the empowerment of social stakeholders. Both carbon initiatives are poised to augment Suzano's existing practices by incorporating elements that transcend traditional approaches, thereby integrating three distinct dimensions:

• Sustainable forestry management;
• Restoration of native forests;
• Social and territorial development.

Suzano's forestry management integrates productive efficiency with social and environmental commitments, ensuring socially responsible and environmentally sound practices. Generally, it promotes innovation through advanced genetic techniques and silvicultural models, while respecting the socio-environmental characteristics of the region in which it operates. Furthermore, the company is committed to forest preservation by monitoring biodiversity and safeguarding micro-watersheds.

In the socio-economic sphere, it prioritizes dialogue with local communities and develops social initiatives that benefit the regions near its management operations. It is noteworthy that Suzano intends to seek certification from the Forest Stewardship Council® (FSC®) or PEFC/Cerflor for all areas involved in carbon projects. Concerted efforts are currently underway to accomplish this objective.

Suzano will be responsible for funding activities related to carbon initiatives. This includes covering costs for commercial planting and investing in socio-environmental projects mentioned earlier. The company is planning finances to allocate part of the credit sale revenue to social projects and forestry efforts, besides commercial planting. Transactions of carbon assets occur after a verification audit, where an independent third party certifies that the project meets the adopted certification standards.

It should be noted that Suzano does not consider the utilization of carbon credits for offsetting, and consequently, for meeting its emissions targets.

Carbon Horizon Project

In 2022, Suzano developed the Carbon Horizon Project, which is founded on the Clean Development Mechanism's ACM0003 Afforestation, Reforestation, and Revegetation (ARR) methodology. This project was subsequently submitted for certification by Verra.

The carbon initiative is situated within the premises of the Três Lagoas (MS) plant and aims to promote reforestation through an integrated landscape approach. This approach involves the planting of fast-growing species, specifically eucalyptus, alongside native species of the Cerrado biome. Furthermore, it facilitates socio-economic initiatives directed at the communities in proximity to the project.

The proposed environmental restoration for the Cerrado biome emphasizes the recovering degraded areas, through activities aimed at controlling erosion processes, combating invasive exotic species, facilitating natural regeneration, and planting native species. The rehabilitation practices initiated in 2023 employ a methodological approach rooted in ecological succession, a process supported by natural recovery mechanisms to maintain ecosystem balance. Consequently, these restoration strategies are endorsed by the company Agroícone, the overall coordinator of the Caminho das Sementes initiative.

Initially, a preliminary diagnosis of areas suitable for the development of the carbon initiative was conducted, using drone-based topographic surveying and expert analysis of the results, thereby ensuring the selection of the most appropriate restoration method tailored to local characteristics.

In this context, the direct sowing method, also known as muvuca, using seeds sourced from the Seed Network, was carried out in accordance with the established technical guidelines. Continuous field monitoring, conducted in collaboration with Agroícone, ensures an accurate assessment of the sustainability of the restoration areas and informs recommendations for adaptive management.

In 2025, aerial seeding via drone technology was implemented to reduce costs and evaluate a more rapid, accessible restoration methodology. This technique facilitates the uniform and controlled dispersal of native seeds across extensive, inaccessible regions. Such an approach is particularly pertinent in the Cerrado biome, where elevated costs and operational complexities continue to hinder large-scale initiatives. Investing in such solutions is vital to enhancing the viability and scalability of restoration efforts, integrating technological innovation, efficiency, and ecological diversity within one of the country's most endangered and strategically significant biomes.

It is worth mentioning that both implementation and monitoring meet the requirements of state legislation, ensuring alignment with the Environmental Regularization Program (PRA). Furthermore, Suzano has been assessing alternative restoration techniques to secure a favorable cost-benefit ratio, such as drone-based aerial seeding, through strategic partnerships.

Finally, the social projects under development in the Três Lagoas region, funded through carbon credit revenue, are:

• Inclusive Recycling: Its objective is to generate income for individual collectors of recyclable materials who are socially vulnerable and below the poverty line. The initiative encourages the productive organization of cooperatives within the project region, with particular focus on waste management and public health. By 2025, this initiative has strengthened the local recycling chain, fostered social inclusion, generated income, and improved working conditions for 149 socially vulnerable waste pickers. Additionally, it has benefited another 120 participants through complementary activities associated with the 'Sowing the Cerrado' program, resulting in a total of 269 individuals supported;
• Semeando o Cerrado (Sowing the Cerrado): The goal of this program is to address the demand for native Cerrado seedlings necessary for the ecological restoration production chain. It accomplishes this through training in seed collection and empowering local communities. The primary beneficiaries are rural families located in the project region. By 2025, the Semeando o Cerrado project had established itself as a strategic initiative for the productive and inclusive restoration of the biome. It promotes training and income generation for local communities involved in the collection and sale of native seeds. To date, more than 820 kg of seeds from 25 native species have been sold, thereby strengthening the ecological restoration chain and emphasizing the importance of traditional knowledge as a foundation for conservation and sustainable development in the Cerrado;
• Other social projects are currently under review by the relevant technical team, with the aim of enabling the Carbon Horizon Project to reach a broader range of stakeholders and benefit from the investment in carbon credits within the region.       

More information on this initiative can be found at the following links:

• Carbon Horizon Project, registered on the Verra website;
• Carbon Market: excerpt from Suzano's official website on the carbon market;
• Video about the Carbon Horizon Project with Portuguese subtitles;
• Video about the Carbon Horizon Project with English subtitles.

It is worth noting that the carbon credits from the Horizonte Project are currently being traded in the market with companies aligned with climate change strategies and decarbonization targets. Furthermore, some of the assets generated by this project have been used in internal initiatives to offset various types of products, such as copies printed on the new Pollen® Paper for the books 'In Defense of Time,' 'This is How It Begins,' and 'A Good Life.' The quantity of credits sold or retired is detailed in the table below.             

The table below presents the results achieved by the Carbon Horizon Project, which have already been secured through verification processes.