A Brazilian Emissions Trading Scheme: modelling a legal framework to secure its environmental integrity and ensuring effective reduction of greenhouse gas emissions by Rodrigo Sales PhD Candidate UNSW Law School October 2017 PLEASE TYPE THE UNIVERSITY OF NEW SOUTH WALES Thesis/DissertationSheet Surname or Family name: Sales First name: Rodrigo Other name/s: Abbreviation fordegree as given in the University calendar: School: Law Faculty: Law Title: A Brazilian Emissions Trading Scheme: modelling a legal framework to secure its environmental integrity and ensuring effective reduction of greenhouse gas emissions. Abstract 350 words maximum: (PLEASE TYPE) Brazil is one of the world's largest emitters of CO2. However, given its unique emissions profile, which results from its high proportion of land-use related emissions together with the potential availability of renewable energy sources, Brazil possesses enormo s potential to reduce its CO2 emissions and transit to a low-carbon economy. As part of its efforts to mitigate climate change, the Brazilian Government has developed an ambitious voluntary greenhouse gas emissions reduction target and a climate change policy, the Brazilian Climate Change Policy, which foresees that a future Brazilian Emission Reduction Market could be part of the country's efforts to reduce emissions. However, to date, there has been no fonnal adoption of such a market or any governmental indicatior f how it should operate. This thesis examines the possible development and application of an emissions trading scheme (ETS) in the Brazilian context and analyses whether an ETS would be relevant to assist Brazil in reducing its greenhouse gas emissions. In particular, the thesis addresses the question of what is the most appropriate legal framework for securing environmental integrity in a future Brazilian ETS. To this end, the adoption or consideration of ETS as a climate change policy, both internationally and in relevant national jurisdictions, is examined and a critical analysis of emissions trading in the context of the Brazilian legal system and development dynamics is advanced. The key inherent and contingent features of emerging ETS in the EU, New Zealand and Australia are identified and �malysed, and the potential benefits of an ETS, together with the optimal conditions for its application in the context of the Brazilian greenhouse gas emissions profile and corresponding climate change legal and policy framework are assessed and evaluated. The thesis concludes with an analysis of the conditions for optimal incorporation of an ETS into the Brazilian legal framework, identifying the structural and functional elements needed for a Brazilian ETS to effectively reduce greenhouse gas emissions. By doing so, this thesis models the potential role of ETS in filling a gap in the Brazilian regulatory framework devo!ed to climate change mitigation. Declaration relating to disposition of project thesis/dissertation I hereby grant to the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or in part in the University libraries in all forms of media, now or here after known,subject to the provisions of the Copyright Act 1968. I retain all propertyrights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or partof this thesis or dissertation. I also authorise Universi�icrofilms to use th 350 word abstract of my thesis in DissertationAbstracts International (this is app!icable to doctoral theses only). 1/ Date The University recognises that there may be exceptional circumstances requiring restrictions on copying or conditions on use. Requests for restriction for a period of up to 2 years must be made in writing. Requests for a longer period of restriction may be considered in exceptional circumstances and re uire the a roval of the Dean of Graduate Research. FOR OFFICE USE ONLY Date of completion of requirements forAward: i i ORIGINALITY STATEMENT ‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project’s design and conception or in style, presentation and linguistic expression is acknowledged.’ Signed …………………………………………….............. Date …………………………………………….............. COPYRIGHT STATEMENT 'I hereby grant the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or part in the University libraries in all forms of media, now or here after known, subject to the provisions of the Copyright Act 1968. I retain all proprietary rights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation. I also authorise University Microfilms to use the 350 word abstract of my thesis in DissertationAbstract International (this is applicable to doctoral theses only). I have either used no substantial portions of copyright material in my thesis or I have obtained permission to use copyright material; where permission has not been granted I have applied/will apply for a partial restriction of the digital copy of my thesis or dissertation.' Signed Date AUTHENTICITY STATEMENT 'I certify that the Library deposit digital copy is a direct equivalent of the final officially approved version of my thesis. No emendation of content has occurred and if there are any minor variations in formatting, the are the res of the conversion to digital format.' Signed Date -· ii DEDICATION I dedicate this work to Dr. Kazuo Watanabe, Professor-Doctor of Law at São Paulo University Law School, Brazil; Doctor Honoris Causa, Keio University, Japan. iii ACKNOWLEDGMENT The experience of pursuing a PhD degree brings one’s personality to different levels of confrontation with his best and worse characteristics, and, at least, provides for a unique opportunity for self-development (if one survives his own inherent difficulties in meeting the requirements demanded by the job). In my case, the challenge was initially fuelled by a genuine desire to deepen my understanding of some aspects of climate change law, a field to which I have dedicated part of my professional lawyering time since its initial embryonic incorporation by the legal industry in the late 1990s. This apparently candid goal was then captured by the much larger demands of a PhD research and writing, and the process became an important vehicle for me to learn some of the intricacies of the complex field of climate change law and its intersection with policy, science and economics. Further, it demanded a systematic study of many important aspects of Brazilian culture, development history and law, the results of which greatly enriched my understanding of the complex and rich background we Brazilians belong to. Hopefully, the results of this intellectual effort are properly reflected in the thesis and may contribute to the studies on climate change policy alternatives, particularly emissions trading schemes, to assist Brazil in meeting the demands towards a low carbon economy. As always, possible contributions of this thesis to this goal would not be possible without the assistance and valuable support of many people, either directly involved in the academic work or by simply being around and supportive in different parts of the journey: First of all, I express my deep gratitude to my Thesis Supervisor Prof. Rosemary Rayfuse, for believing in my potential as a researcher since our first encounter and being supportive and available through all phases of my PhD. Without her close guidance, this work would not meet the requirements of a PhD. I also thank my co- Supervisor Prof. David Freestone, for his important insights, guidance and support on key phases of the project. This PhD was also enriched by important insights from all UNSW Law School Faculty who acted as Progress Review Panel Members during all phases of the project: Profs and/or Senior Lecturers and Senior Research Fellows Andrew Byrns, Amelia Thorpe, Cameron Holley, David Leary, Jane McAdams (Panel Chair) and Sarah Waddell. Also, Prof. Theunis Roux (Associate Dean/Research) has being always supportive in providing guidance in relation to institutional matters of my candidature. My deep gratitude also goes to Ms. Jenny Jarrett, UNSW Higher Degree Research Officer, whose administrative support throughout all my tenure as a PhD Candidate, either at the UNSW campus or during the last phase of the work, which was completed from Brazil, was always unconditionally given with extreme iv professionalism, efficiency and elegance. I also received important peer support from other PhD candidates with whom I had the pleasure to share the PhD candidate offices for some very intensive years of dedication to learning, especially Drs. Rebecca Welsh, Tamara Tulich and Wen Wei. At the final stage of this work, I received very special assistance from Luciana Carvalho, Patricia Tagnin and Claudia