Brazilian officials announced the creation Thursday of an exchange where companies can buy and sell carbon credits in order to meet emissions limits under the Kyoto protocol.

The exchange will conduct negotiations between the world's biggest polluters and countries that can clean the atmosphere -- like Brazil.

Guilherme Fagundes, chief of special projects for the Brazilian Futures and Commodities Exchange, said that by the end of the year, the exchange will offer carbon credits mostly to foreign companies that must keep their emissions of greenhouse gases in line with Kyoto Protocol.

"Today, these deals are done over-the-counter. They are private and there is no transparency. This will be a big step toward transparency and will generate more efficient pricing," said Fagundes.

The Kyoto Protocol, an international treaty on climate change that took effect in February, caps the amount of carbon dioxide that power plants and fuel-intensive manufacturers in more than two dozen countries are allowed to emit. The United States is not bound by the treaty.

Carbon dioxide is one of the gases believed to cause the so-called greenhouse effect, which is warming the earth's atmosphere.

The treaty, however, allows companies that exceed their limits to buy carbon credits by sponsoring Clean Development Mechanisms -- projects that can prove they remove carbon dioxide from the air or avoid the release of emissions that would otherwise be released into the atmosphere.

Fagundes said the trading, to be carried out at the Rio de Janeiro Stock Exchange, also would help projects seeking to raise money to be certified as Clean Development Mechanisms, perhaps allowing them to sell future carbon credits in the form of options.

At the moment, Fagundes said, only nine projects were ready to register on the exchange and just one was fully certified. But officials said the launch was an important step toward gaining visibility for the exchange.

Jose Domingues Miguez, executive secretary of the Interministerial Commission on Climate Change, said that Brazil has 74 potential projects and acounts for 30 percent of the world's Clean Development Mechanism projects.

He said that within seven to 10 years, these projects could remove 130 billion tons of carbon dioxide from the atmosphere.

According to the World Bank, Brazil accounted for 13 percent of the world's carbon trading between January 2004 and April 2005.

(Published Latimes.com, September 15, 2005)

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