- A Brazilian state was set to close a massive $180 million carbon credit deal, but now faces an escalating legal battle, accused of violating national laws and Indigenous rights, potentially ruining the project.
- Brazil’s Federal Prosecutor’s Office is seeking to nullify the 2024 contract, which sells 12 million carbon credits from Pará to companies like Amazon, Bayer, H&M Group and Walmart.
- Indigenous and Quilombola leaders voice concerns that the program could restrict their access to their land and interaction with nature, undermining inherent rights and deep spiritual connection to the rainforest.
- Widespread accusations over the failure of free, prior, and informed consent for the project highlight ongoing criticism of carbon credit initiatives in Brazil and globally, after scandals involving unapproved use of traditional territories and a loss of confidence in REDD+ projects.
In September 2024, the government of the Amazonian state of Pará signed a $180 million contract to sell 12 million carbon credits to international buyers, including companies such as Amazon, Bayer, H&M Group and the Walmart Foundation. The deal, which involves credits generated through Pará’s jurisdictional REDD+ program, made headlines as the world’s largest carbon credit sale to date.
Nine months later, the contract, brokered by the nonprofit Emergent on behalf of corporate buyers, is being legally challenged in the Brazilian Federal Court and could be canceled altogether.
On June 3, Brazil’s Federal Prosecutor’s Office filed a lawsuit seeking to nullify the agreement and demanding 200 million reais ($36 million) in moral damages for local communities. The lawsuit came after prosecutors raised a series of issues regarding the program and an attempted conciliation between the parties, to no avail. A federal judge has since shut down the request for an injunction, but the case is ongoing.
The lawsuit alleges that the Pará government engaged in the advance sale of carbon credits — a violation of Brazil’s new legislation for the carbon market. The law enacted in 2024 established a set of rules to prevent the double-counting of credits when multiple projects are located in the same area.
Felipe de Moura Palha e Silva, head of the Public Prosecutors’ Office in Pará, told Mongabay there is no question the contract constitutes a presale. The document lays out specific sale terms, including the volume of emissions reductions, a fixed price and a schedule for delivery by vintage year. “These credits don’t even exist yet,” he said. “They can only be traded after they are issued and verified.”
The state of Pará, on the other hand, argues that the contract does not violate federal law because it is merely a promise of sale, common among REDD+ projects. In an email to Mongabay, the state’s environment department said, “The signed contract is a pre-agreement that defines future commercial conditions” and that “the sale will only be completed if the credits are duly issued after official validation.” In March, the government also removed all mention of advanced payment from the contract.
In another contentious point, prosecutors accuse the state of failing to obtain free, prior and informed consent from local communities, violating International Labour Organization Convention 169. Pará’s jurisdictional REDD+ program encompasses all forest lands in the state — an area of 84 million hectares (207 million acres), nearly the size of France and Germany combined. The region is home to more than a thousand traditional Indigenous, Quilombola (descendants of formerly enslaved people) and extractive communities.
“The contract should have undergone prior consultation, as the vast majority of carbon credits will come from traditional territories,” Silva said.
While grassroots organizations were present when the deal was sealed in New York last year, at least 38 communities have since expressed they did not feel represented by these entities. “The state agreed to a price, contract terms, and corporate buyers without the participation of the main holders of these environmental assets,” he said.
After the deal was signed, the government launched a two-step consultation process with local communities, which began with informational meetings followed by 47 consultations that started in June. In a recent injunction denial, a judge agreed that the plan shows an intention to safeguard the interests of Indigenous peoples or traditional communities.
Prosecutors, however, are concerned this process is being influenced by the state’s advertisement of a presale at above-market value. They are also looking into payments made by the program to grassroots organizations arranging the consultations, totaling 2.7 million reais ($487,000).
Raul Protázio Romão, the head of Pará’s environmental department, stated that it would be impossible to conduct one-on-one consultations, given the large number of traditional communities in the region. “We couldn’t complete them in two, three, five, even 10 years”, Romão said in a June 3 conciliation hearing hosted by the National Council of Public Ministry. “If each community has its own consultation protocol and we follow them all, that’s 700, 800, 900 consultations. In our view, individual consultations are not necessary.”
Traditional communities share reservations
Miriam Tembé, an Indigenous leader from the I’ixing community in Tomé-Açu, northeastern Pará, said her community was never invited to meetings or consultations about the initiative. “At no point did we meet with the government to discuss carbon credits,” she told Mongabay. “No one ever contacted us.” Tembé is the president of the Tembé Indigenous Association of the Acará Valley, which represents five Indigenous communities and a total of 600 Indigenous people. She said they have no interest in participating in the program and are waiting for an opportunity to officially opt out — an option that has not yet been presented to them. “Our territory is our home. We’ve always lived in harmony with nature, and we’ve never needed to receive money to protect it.”
Their main concern is what they see as the privatization of their land. Their territory, covering approximately 105 square kilometers (40 square miles), is still awaiting official recognition as Indigenous land. Meanwhile, the community has had to fend off violent invaders seeking to cultivate palm oil, a lucrative crop in the region.
Tembé sees the carbon program as yet another threat. “We are constantly fighting to protect our territory,” she said. “And now the government wants to rent it out to industries around the world so they can keep polluting and destroying the planet.”
Vanuza Cardoso, a Quilombola leader from the Abacatal community near the state capital of Belém, shares similar concerns. Her community of 520 people did participate in an initial round of informational meetings, but she said the experience left them with more questions than answers. “By the end, most people didn’t understand the project,” she told Mongabay. “Even those of us familiar with carbon credits don’t feel informed enough to support this deal.”
Cardoso’s main fear is that the initiative will restrict access to forestlands in ways that threaten their way of life. “We, traditional communities, have an emotional connection to this land,” she said. “Our Afro-religious communities need roots and leaves from these forests. We need to interact with nature. Prohibiting access to these spaces would be a violent act.”
Cardoso also warns against the way the program is being presented to communities as public policy. “They’re saying the money from this deal will be transformed into public services like schools and territorial protections,” she said. “But those are our rights, and it’s the state’s duty to guarantee them. We shouldn’t give up our rights under the pretense of an agreement.”
Corporate buyers are protected
The Public Prosecutors’ scrutiny of the carbon offset program comes just months before the COP30 climate summit in the state capital of Belém, when Pará hoped to showcase the initiative.
The carbon credit market is currently navigating a period of significant transition and criticism, largely due to a widespread loss of confidence in traditional REDD+. Past scandals, including arrests, accusations of illegal logging, land grabbing, and concerns that 90% of some rainforest carbon offsets were “worthless,” have deeply damaged the industry’s reputation and led to a “free fall” in carbon credit prices. In response, there’s a strong pivot toward restoration projects – specifically afforestation, reforestation, and revegetation (ARR) – as a means to regain market trust.
At the conciliation hearing, Romão admitted that the prosecutors’ efforts could completely derail the program and the agreement with corporate buyers. “If [the contract] is rescinded, it can’t simply be redone,” he warned. “You can’t just reassemble the pieces. The damage could be irreparable.”
If that happens, large corporations that have signed on to purchase carbon credits would be protected from any financial fallout. In March, after prosecutors began questioning the initiative, the Pará government created an addendum to the contract. A new clause stresses the state will “indemnify, defend, hold harmless and exempt” buyers in the event of legal or other complaints.
A representative for Amazon told Mongabay over the phone that the company is closely monitoring the situation but cannot provide a full statement on the matter while the litigation is ongoing.
Meanwhile, in a written statement, an Emergent spokesperson said, “Our agreement with the government of Pará remains in place.” They continued, “It stands to deliver critical climate finance to the state of Pará and leads the way for other states in Brazil.”
The other companies that signed the deal didn’t answer Mongabay’s requests for comments.
Banner image: Amazon rainforest. Image by Rhett Ayers Butler / Mongabay.
For scandal-ridden carbon credit industry, Amazon restoration offers redemption
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