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[ Breaking News, Brazil ] Decarbonization Credits: Joint Public Consultation CPC, CFC and CVM

Accounting Pronouncements Committee (CPC), Federal Accounting Council (CFC) and the Securities and Exchange Commission (CVM) together in a public notice of yesterday, August 21, 2023, on Technical Guidance OCPC 10, to receive comments in the form of 10 questions and sub-items as per the notice (basically whether or not you agree with the proposal, and request for justifications and alternatives).


The objective of OCPC 10 "is to deal with the basic requirements for recognition, measurement and disclosure of decarbonization credits, to be observed by entities in the origination, negotiation and acquisition for the fulfillment of decarbonization goals (retirement), as well as to provide for the associated liabilities, whether resulting from legal or non-formalized obligations, as defined in CPC 25 - Provisions, Contingent Liabilities and Contingent Assets."


It should be noted that the Guidance:

  • is not intended to address tax and legal issues associated with decarbonization credits

  • is a first movement to direct the accounting treatment of decarbonization credits of entities operating in the Brazilian market

  • may be revised in the future, depending on the evolution of the topic, new positions by the International Accounting Standards Board (IASB) and enactment of laws


And more specifically about the audience version:

  • distinguishes the following agents, including their different accounting treatments: originator, operator ("broker-trader") and end user

  • indicates that the decarbonization credit is "a non-financial, intangible asset without physical substance" (§31)

  • defines "allowances" as "non-financial, intangible, fungible, standardized, traded on an exchange or over-the-counter market, which represent allowances for GHG emissions" (§53).

  • treats separately: the Regulated Market (§45), "Renovabio" (§72, including its accounting recognition) and the Voluntary Market (§113)


Click here for the notice, version of the CVM website , identical to the versions on the CFC and CPC portals.


And in the image below you access the 28 pages of the OCPC 10 Technical Guidance itself.


The deadline for this hearing is 60 days, that is, suggestions and comments must be sent by October 20, 2023.




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