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Carbon credit projects in Brazil are a source of income for illegal loggers

Carbon credits have been issued to companies around the globe in exchange for their investments in conservation projects in Brazil. These projects aim to protect the Amazon Rainforest.

Many of these projects benefit people and companies fined by Brazilian authorities because they destroyed the rainforest.

Reporters examined 36 conservation projects in Brazil's Amazon that offered voluntary carbon offsets to the world's largest registries. The Brazilian environmental agency Ibama has punished landowners, developers, or forestry companies for their involvement in illegal deforestation.

Offenses included clear-cutting rainforests without authorization, transporting trees felled without valid permits, and inputting false information into a government tracking system for timber. These infractions, according to government officials and experts, reflect the wide range of roles played in the illegal timber trade that is destroying the rainforest.

Ibama fined 20 conservation projects for deforestation, before the carbon credits registry was created. In seven cases, fines were continued for deforestation committed by project backers after registration.

Raoni Rajao said, "The whole concept is a failure." She was the head of the Brazilian Environment Ministry program to combat deforestation from December until now. He said that by paying people who have a history of breaking environmental laws, the carbon markets may be funding illegal deforestation groups.

They might reduce deforestation one place but increase emissions in another with the same resources," said Rajao. He is now a professor of environmental policy at the Federal University of Minas Gerais.

Brazil has fined people who violate laws that limit deforestation in the Amazon rainforest. The Amazon is the largest rainforest on earth, and it's lost a fifth of the original tree cover within the last half-century. Scientists warn that further deforestation will release large quantities of carbon dioxide which accelerates climate change.

According to market watcher AlliedOffsets, the Amazon has become an important part the voluntary carbon markets, which was valued at $7.6 billion in the global market over the past five years.

Carbon credits are generated by projects that reduce greenhouse emissions, such as avoiding deforestation of rainforests. Each carbon credit is equal to one metric ton saved of carbon dioxide. Polluters may then buy carbon credits in order to offset their own emissions.

Referees who set standards on the global market accredit firms like Verra (a non-profit) and Cercarbono, its Colombian competitor. They have systems that verify whether a project reduces emissions in the way it was promised.

The documents relating to 36 conservation projects in Brazil's Amazon, which were certified by Verra and Cercarbono as of the beginning of the year, numbered thousands of pages. Both keep public records on the project's boundaries, designs and credits. The reporters identified the key players, and compared them with Ibama’s database of fines.

Ibama held the backers of five projects responsible for illegal logging within the boundaries of the conservation projects they were supporting, and not elsewhere.

The study did not find any evidence that individual carbon credit projects were failing to meet their commitments to reduce deforestation compared to a projected baseline.

A spokesperson for Verra confirmed that the registry would "take any allegations of illegal activity related to a registered project in one of our programmes seriously" and conduct a review on all projects flagged during the analysis.

Cercarbono announced that it has opened a formal inquiry into projects flagged as illegally deforested by anyone who is familiar with the issue.

A Cercarbono spokesperson stated that "there is no indication" that the integrity or the projects you mentioned has been compromised.

Multinationals like the U.S. aircraft manufacturer Boeing, Spanish telecom Telefonica, and Colombian oil producer Ecopetrol are among those who have purchased credits for projects. Accrediting companies are often relied upon by buyers to ensure quality.

Boeing announced that it has acquired carbon offsets which meet widely accepted science-based standards. Telefonica is a member of a corporate group that seeks to improve the integrity of voluntary carbon credits. Ecopetrol declined comment. Brazil's Environment Ministry overseeing Ibama said that the agency's database of enforcement offers a reliable record of environmental violations, which can and should be used to verify effectiveness of conservation projects sold as carbon credits.

A DOCTOR WHO TURNED INTO A LOGGER

Ricardo Stoppe Junior was one of the most prominent names on the Brazilian carbon credits market in the last five years. In June 2024 he was arrested as part of an investigation by the federal police called "Operation Greenwashing" and accused of being in charge of a massive illegal logging scheme.

Stoppe has been promoting himself as the world’s top carbon credit entrepreneur for many years. A Brazilian doctor, he claimed to have put his life on hold in order to save 10,000 square kilometers (40 sq mi) of Amazon rainforest. According to AlliedOffsets' public transaction data and price tracking, he sold $15 million in credits since 2020.

Stoppe's success in the carbon market came despite public records showing Ibama fines against him and his partners since 2014 for deforestation-related offenses.

A confidential 302-page report by the police, reviewed and analyzed by, documents how authorities determined that he used his Carbon Projects to fund a criminal plan to bribe public officials in order to forge land title and launder over a million cubic metres of illegally felled rainforest timber.

Last year, a federal judge ordered Stoppe's arrest and the freezing of $300 million in assets of Stoppe and his four associates for their alleged involvement in a criminal group responsible for illegal land grabs and logging.

All five lawyers disputed the accusations of federal police and denied that their clients had done anything wrong. Since then, they have been placed under house arrest while awaiting charges from prosecutors. The prosecutors declined to comment about the case.

Stoppe denied participating in criminal activity in his first interview following five months behind bars. He said his projects had brought environmental protection and legal rigor to a part the rainforest that was plagued by illegal land grabs.

There's no such thing as a state. No police. "Nothing," Stoppe replied. "It is like the Wild West."

He blamed the accusations against him on a lack of oversight by his business partners, and on investigators' bad faith. He denied participating in illegal deforestation.

History of Fines

Stoppe purchased a tract of land in the southern Amazonas State, which was named "Our Lady of the Ituxi Waterfalls" after cascades that were considered sacred by the neighboring Indigenous community.

Stoppe stated that his plan was to clear the land and raise cattle.

After a near-death encounter in the jungle when a branch knocked off his horse, he said that changed. He said that after nearly a week of being in a state of coma he realized he didn't want to destroy the rainforest.

Stoppe transformed the forest surrounding the ranch into "Fortress Ituxi," his first carbon-market conservation project, which he will register in 2020 with the global certification body Verra. Ibama fined him at the time twice for falsifying data in Brazil's Timber Tracking System, totaling over 125,000 reais (approximately $23,000).

Two years later he recruited ranchers from the surrounding area for a new project called "Unitor", which aimed to protect a large tract of rainforest that stretched between the Iquiri National Forest Territory and the Kaxarari Indigenous Territory. Stoppe, along with two other landowners, had already racked up Ibama penalties totaling over 8,6 million reais by the time they registered their second project. This included fines for clearing native forest and grazing cows on land that was deforested.

The Brazilian Environment Ministry has not commented on specific cases that involve Stoppe and landowners.

Stoppe's proposal for Unitor, which he submitted to Verra, highlighted its benefits. It warned against "criminal groups that invade federal public lands to deforest them and to commercialize wood illegally harvested."

Many of the carbon credit projects we reviewed were based on a similar sales pitch. According to common methods of generating credits through conservation, the more serious the threat is, the higher the value of the avoided deforestation.

Police claim that Stoppe sold the solution to a problem he created.

The federal police report describes the alleged scheme, using wiretaps, land titles and permits, satellite images, and bank records.

The police report alleges that Stoppe and his accomplices bribed officials to create land claims in national forests and other public lands, converting them into private estates which they then grouped together into carbon credit projects.

According to a police report, these conservation projects were also a way to easily cover up massive illegal logging. The group registered their "forestry management plans" under a program of the state that allows selective logging in order to thin out a forest.

Police say that Stoppe and his partner used state-issued logging permits for their project area to wash wood they had illegally extracted elsewhere. Lumber in the Amazon with legal permits is worth many times more than undocumented lumber.

Thiago scarpellini, the lead investigator at the police department, said in an interview that Stoppe was the leader of a scheme to facilitate illegal logging on nearby public lands like the Kaxarari Reservation. He stated that Stoppe is "the subject of this investigation but he is not the only person working in this manner." He didn't elaborate.

According to the report, Scarpellini’s team of investigators had compared the logging permits with satellite images of Stoppe’s projects. They found that they had created enough fraudulent permits to wash more than 1.1 millions cubic meters of illegal wood.

Stoppe claimed he would prove to the court all land claims made in his name, and denied any involvement in illegal logging.

Verra Registry put Stoppe's projects on hold after his arrest.

The President Luiz inacio Lula da silva is trying to position Brazil as the global leader for "green" development. This will be on display when Brazil hosts the United Nations Climate Summit in November.

Brazil, in an effort to meet its climate change commitments made under the Paris Agreement of 2016, passed a law in 2017 to create a carbon market regulated by the government, similar to those found in Europe, China, and California.

The law, when it comes into effect, will require Brazilian industries to reduce greenhouse emission or pay for them to be offset in a regulated marketplace, which includes conservation projects that sell carbon credits.

The government also encourages carbon credit projects which actively restore damaged biomes instead of paying landowners to avoid deforestation. The findings regarding Brazil's voluntary market are "very grave" and highlight challenges facing regulators in setting up a new market. Cristina Reis is the deputy secretary of sustainable economic development for Brazil's Finance Ministry.

"SOMETHING WRONG"

Ibama fined Stoppe and his partner 18 additional times for, among other things, razing 42 sq km of rainforest and falsifying 180,000 cubic meters in timber.

According to an analysis of Ibama’s fines that were independently levied from the police investigation, some of these offenses fell within the scope of Stoppe’s carbon credit project.

Edivan Kaxarari is a leader in the local Indigenous community. He said that some locals were hesitant about Stoppe's promise to protect the forest. They turned down the chance to work on a project to create carbon credits.

The documentation for Stoppe's Carbon Credit Projects filed with Verra shows that he and partners staked a claim on land along Bull Road, which is a local road that passes by other ranches as well as the Kaxarari Reservation.

Edivan, a reporter and Edivan drove down the dusty roads to Stoppe's Ituxi Ranch for two hours. He surveyed the disappearing forests of his ancestral lands. Edivan surveyed the vanishing forests on his people's ancestral lands as he drove with reporters down a dusty road to Stoppe's Ituxi ranch.

Ibama’s enforcement database revealed that the agency had penalized Stoppe and his partner at least six different times for illegally deforestation on Bull Road.

Edivan, who had been watching illegal logging for many years, said he was on his guard when "white men" came to the reservation two years ago and preached the environmental benefits Stoppe's projects of carbon credits. They also proposed a project in Kaxarari territory.

Stoppe confirmed that he has begun discussions with Kaxarari regarding a partnership on a project involving carbon credits.

Edivan, a participant in the meeting, said "They brought this carbon project proposal and mentioned what had already been done on the Ituxi Ranch with Dr. Ricardo." They didn't give much time for us to accept.

Edivan and other leaders of the community expressed concerns over the proposal.

Why is someone deforesting if they are working on a carbon project? He said. There's something wrong." (Reporting and editing by Claudia Parsons; Additional reporting by Marcela Parsons; Additional reporting by Brad Haynes; Jackie Botts, Ricardo Brito, and Jake Spring)

(source: Reuters)