Brazilian authorities accuse Canadian company of carbon credit fraud

Dec 1, 2023

Brazilian authorities accuse Canadian company of carbon credit fraud

Multi-company operation allegedly treated public land as private, disrupting traditional communities
River and forest in the state of Para in northern Brzail. Photo from Wikimedia.

In October, media in Brazil reported alleged fraud in a carbon credit scheme involving a Canadian corporation. The Public Defender’s Office from Pará state in northern Brazil, which includes part of the Amazon forest, made the allegations.

The authorities say that public lands located in the rural city of Portel were treated as private property in order to allow five national and international companies to sell carbon credits to multinational giants. This has caused disputes among the locals over land. Residents also say they have not seen the financial benefits that the operation was supposed to bring to the impoverished municipality.

The Canadian corporation RMDLT Property Group is among the accused. Those affected include the ribeirinhos, traditional peoples who reside in pile dwellings in the riverside basin and commute by motor or row boats, and who make their living from small-scale fishing and farming. All of the impacted communities are in agricultural extractive settlements demarcated by the Pará government.

In a video interview with The Media Co-Op, Nilson Côrrea, the secretary general of the Rural Workers of Portel Syndicate (Sindicato dos Trabalhadores Rurais de Portel, STRP) recalls that in 2018, the locals started to see an influx of outsiders in their region. Only much later would they recognize this as the beginning of the activities leading to the carbon credit project that is the subject of the recent allegations.

Côrrea says that this influx had “intensified by 2020 and we started to identify some boats with equipment, technicians, and environmental professionals focused on forests, geoprocessing, georeferencing, and they would enter the settlements bringing in baskets of staples, small stoves and taking the Individual Environmental Rural Register.”

The register – called the Cadastro Ambiental Rural, or CAR, in Portuguese – is a national government database of rural properties which is used in controlling and monitoring environmental and economic planning, and fighting deforestation. It is maintained solely by the Brazilian federal government and not by private parties.

For Côrrea, the fact that people working for a private entity were claiming to be doing this just “isn’t recognized,” and the community – a "state settlement" – remains “collective space.” However, among the inhabitants this allegedly fraudulent land registration process led to conflicts that had not previously existed. Some residents started to question the boundaries of their lands and their neighbours’, and thus disagreements erupted in a once peaceful community.

Côrrea and the locals have serious questions about the process and the deeds that, he says, have never been truly answered. They started to study the situation, and in 2020 during a meeting with the STRP, the visitors promised that along with stoves and food, the locals would be paid, an artesian well would be constructed, and other improvements would be performed in Portel.

The visitors refused to answer questions about their financing or who was in charge, according to Côrrea. “At that meeting there were two armed private security people that came alongside two women and a man, one of them an environmental professional. Still, we didn’t close the deal and things turned upside down as they started to spread that the syndicate was against the project to develop Portel and the environmental agenda.”

“It’s obvious that we live in an impoverished region,” Côrrea says. "Basic needs such as health, education, housing are precarious. Hence, they came with this financial and socio-environmental proposal to take advantage of humble families living in the forest – who in fact are those defending the forest. We are the ones guarding the forest.” He saw this process intensify during the Covid-19 pandemic that ravaged Brazil. “However, up to this point there was no conversation, and we still didn’t know what was ‘carbon credit’.”


Carbon credits still poorly understood

Carbon credits are relatively new financial instruments developed as part of certain mainstream approaches that proponents claim will combat climate change.

Martin Léna is an advocacy officer for Survival International. He explains, “Climate change is caused by carbon dioxide, and other greenhouse gases, being released into the atmosphere, mostly from burning fossil fuels. The only effective solution would be to stop these emissions. But the big polluters and their allies, including large conservation NGOs, who promote ‘offsetting’ and ‘nature-based solutions,’ focus instead on counterbalancing emissions. Concretely, this means that instead of reducing their own pollution, they pay someone else, somewhere, to reduce their carbon emissions or to ‘capture’ that carbon and remove it from the atmosphere. This exchange is done through the sale of carbon credits on dedicated carbon markets. The credits can be generated by various schemes, for example by creating Protected Areas, ‘restoring’ nature, or planting trees.”

Léna believes that carbon credits have serious problems that are rarely discussed. He identifies “two main issues: first, the polluting companies who buy these credits continue producing their own emissions, and second, vast areas of land are needed for such projects and the easiest targets are the lands of Indigenous people, which they have protected for generations. This will exacerbate land grabs and human rights violations.”

Denny Thame from the Center for Carbon Research in Tropical Agriculture says, “Carbon credits can be an important tool to implement the Brazilian ecological transition. If well designed, implemented, and monitored, they can, for example, finance innovative socio-bio projects, fund restoration programs, help to maintain the forest standing, and therefore mitigate climate change and, at the same time, increase the collaboration of government, business, academia, and society. However, the Brazilian reality of carbon credits is complex overall because of land disputes and extreme poverty. This multidimensional problem causes vulnerabilities to the carbon project developers and to the reputation of the investors that are very hard to really address on a project scale.”

In the case of Portel, the agency that was certifying it was VERRA, regarded as the globe’s biggest certifier of voluntary carbon offsets. To the journalists from G1 that broke out the story, VERRA affirmed that it is collaborating with the Defender’s Office and is reviewing the allegedly fraudulent initiatives. It also states that the registered projects are verified and validated through third parties while the auditing is usually hired by the project proponents themselves. 

“There is a huge confusion about the carbon market and the various types of carbon pricing,” Thame says. “First, there are many possibilities of voluntary markets, from countries, states, and private institutions. Second, there is carbon taxation, which some Brazilian neighbors such as Argentina, Colombia, Chile, and Uruguay have already implemented. Third, ETS, the regulated carbon market which is now in a big dispute in Brazil and has already been voted on [in the] Senate. I hope the regulated market becomes a reality here like in many countries. And then there are the REDD+ [projects], which are the governmental and non-governmental proposals for reducing emissions from deforestation and degradation.”


New lessons in environmental law

According to the RMDLT Property Group's website, it “is an international corporation that develops environmental projects that monetize carbon credits, using the REDD+ avoided deforestation methodology and various industry standards.” RMDLT did not respond to The Media Co-Op's request for an interview about the alleged fraud.

The Switzerland based Allcot Group was named in an initial document as one of its proponents, but since then have said that they have no involvement in the project. They have asked the Public Defender’s Office to remove them from the lawsuit. They sent The Media Co-Op a document forwarded to VERRA from April 2013 in which Allcot renounced any involvement with the RMDLT project.

The statement is reproduced in full below. In part, it reads, “ALLCOT was involved in the registration of the project (only in terms of design of the project, but never development, implementation, nor operation), and for that reason it appears in that first document sent to VERRA and dated January 2013, but ALLCOT is not related to the project since then.”

Despite academic and employment background in related areas, Côrrea says that like a lot of people he had no opportunity to learn about carbon credits until the recent crash course provided by the events described in this article. He is thankful for the journalistic work performed by Intercept Brasil, Globo, and foreign outlets that made people aware of the situation and drew the attention of legal authorities, as they prepare for the ongoing court battles that lie ahead.

When asked about what lessons he takes from this scenario, Côrrea is blunt: “We have to fight a large and capitalist system which is very complex. The environmental advocacy [in this area] by private institutions isn’t working, nor is the state model, because the public measures do not reach out to the family living in and protecting the area. Therefore, there is a need for a strategy to apply public policies correctly or through a regionalized budget to really respect the locals and to say that those deforesting aren't the ribeirinhos living there but the agribusiness – so, definitely not the families living on subsistence.”


Read below the full-length statement by Switzerland’s Allcot to The Media Co-Op:

ALLCOT was involved in the registration of the project (only in terms of design of the project, but never development, implementation, nor operation), and for that reason it appears in that first document sent to VERRA and dated January 2013, but ALLCOT is not related to the project since then.

As you can notice, at that time the project was approved and accepted by VERRA because it accomplished all requirements of the registration phase, among them, the titles of land tenure.

Likewise, ALLCOT contemplated being part of the project development, implementation, and operation, but rapidly (April 2013) we decided not to participate because our capacity in that moment and the conditions of carbon markets and projects development in Brazil were not favorable.

In the document attached (“VCS Partial Release Representation RMDLT”) you can confirm that ALLCOT resigned to be part of that project in April 2013 and the attached e-mail where you can see that the withdrawal was accepted, long before the project even started (the first crediting period of the project starts in 2019).” 


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