Photo: Projeto Algar (Mandatory credit according to law 9.610/98.)

Initiative will generate first purchase of high-integrity forest carbon credits by Vale; partnership coordinated by Fundo Vale and Grupo Algar.

Vale, through Fundo Vale, and Grupo Algar, through Algar Farming, have just signed a contract to trade high-integrity forest carbon credits. The agreement, which will run until 2030, governs Vale’s purchase of around 133,000 credits, made at the end of 2022, which is equivalent to protecting approximately 50,000 hectares of forest. Carbon credits are units of measurement that each correspond to one metric ton of carbon dioxide equivalent (tCO2e).

As of 2023, the intention is to strengthen the partnership by implementing additional initiatives and investments with social and environmental impacts. This is the first REDD+ project as part of Vale’s Forest Goal strategy, which aims to voluntarily restore and protect 500,000 hectares by 2030. REDD+ is a mechanism that financially rewards companies and countries that maintain carbon stocks through sustainable forest management or reduce greenhouse gas emissions from deforestation and forest degradation.

Grupo Algar’s REDD+ project is located at Fazenda Pacajá, Algar Farming’s forestry arm, in the Marajó region of Pará. It was selected following a study of more than 60 initiatives carried out by Fundo Vale. “Of this total, we shortlisted five and we ended up choosing the Fazenda Pacajá project due to its social and environmental benefits, its concern with co-benefits and its long-term view of the region,” says Gustavo Luz, Fundo Vale’s equity stakes manager.

Grupo Algar’s REDD+ project aims to conserve more than 140,000 hectares of native forest in the Amazon biome, preventing unplanned deforestation there. It is estimated that over the project’s 30-year lifespan, it will avoid approximately 40 million tons of atmospheric CO2 emissions. The project is in the final stage of registering with the Verified Carbon Standard (VCS), the most widely used quality standard for carbon accounting and one of the most reliable in the voluntary market, and with Social Carbon, a standard for evaluating and monitoring co-benefits, applied together with carbon accounting standards. “After we have finished registering the project with the VCS and Social Carbon standards, we will apply for Climate, Community & Biodiversity (CCB) accreditation. This will demonstrate that the project simultaneously tackles climate change, supports local communities and small producers, and conserves biodiversity,” explains Arthur Rodovalho, head of legal and compliance at Algar Farming.

In addition to sustainable forest management, Fazenda Pacajá also carries out fauna monitoring. This work recently led to a “Jaguar Certificate” being awarded by the Instituto Onça Pintada (“Jaguar Institute”). The institute grants this certification to enterprises that promote the conservation of this type of feline in Brazil. Fazenda Pacajá also runs one of the most important forest management projects in the Brazilian Amazon, certified by the Brazilian Forest Certification Program (CERFLOR) and internationally recognized by the Program for the Endorsement of Forest Certification (PEFC).

According to Luciana di Paula, Algar Farming’s forest executive, “Sustainable forest management prioritizes keeping the forest standing, given that the forest’s existence guarantees the economic survival of forestry activity and enables native people to live off the resources provided by nature itself. This prevents the forest from being felled and contributes to its preservation, while giving it economic value. A well-managed forest will continue to offer its resources to future generations, since timber and other products are renewable natural resources.”

Foto Projeto Algar

Impact Carbon

To arrive at solutions with the greatest possible social and environmental impacts to contribute to Vale’s Forest Goal, Fundo Vale carried out an in-depth study. The idea was to combine forest protection, generation of carbon credits and effective actions to combat deforestation in the Amazon. In addition, some leading experts on this subject in Brazil were consulted in order to support the strategy and generate greater additionality in the area.

This study allowed Fundo Vale to start to promote REDD+ projects. “Fundo Vale intends to support the growth of the carbon market at a fair price that is attractive to consumers and fair to developers. Above all, we want to ensure that carbon benefits are shared with those who live off the forest and help protect it. We call this Impact Carbon,” Luz says.

This new project and partnership will expand the co-benefits between Fundo Vale and Grupo Algar beyond the purchase of forest carbon credits. In the social and environmental realm, REDD+ will contribute to biodiversity monitoring in the region and boost initiatives to prevent deforestation. It will also support the livelihood of communities based on economic, social and environmental investment.

“We want to share our knowledge of the development of supply chains and invest resources to promote these communities, helping from a community perspective. The purchase of carbon credits is one of several components helping to keep the forest standing, transforming the region and residents’ quality of life,” explains Helio Laubenheimer, a specialist in the subject at Fundo Vale.

About Fazenda Pacajá

Fazenda Pacajá is one of the largest areas of sustainably managed forest in Brazil, located in the north of the state of Pará, in the municipalities of Portel and Bagre. It meets the legal requirements for sustainable management as an instrument for the conservation and preservation of native forest. All the trees on the property, located within the respective Annual Production Unit, are inventoried and georeferenced.

After timber is harvested, it receives a QR code, enabling the identification of the species and its respective location, as well as guaranteeing the traceability and transparency of forest management. The activity is based on a low environmental impact timber harvest, proportional to the forest’s regeneration rate, causing the minimum possible environmental impact on the ecosystem.

In addition to the benefits generated by the development of sustainable forest management, Grupo Algar’s REDD+ project contributes to the long-term conservation of the region while establishing a barrier against the spread of deforestation. It is therefore an important tool to contribute to the conservation of the Amazon’s biodiversity.

As well as contributing to the sustainable use and preservation of the forest, social and environmental initiatives are also under way in five local communities, including a quilombo (a settlement composed of descendants of runaway slaves). Social projects that promote the exercise of citizenship are also taking place, as well as workshops on alternative income generation based on sustainable practices.

About Vale’s 2030 Forest Goal

In 2019, Vale committed to an ambitious social and environmental goal that consists of protecting and restoring 500,000 hectares of native habitat outside its sites by 2030. That is equivalent to 500,000 soccer fields. Thus, an important movement was initiated to leverage the forest recovery and protection agenda.

Of this amount, 400,000 hectares will be protected through partnerships with conservation areas and REDD+ projects. The other 100,000 hectares will be restored through a network of partner regenerative businesses and other solutions with positive impacts, designed to generate income and employment, boost sustainable production chains throughout the biome recovery process and sequester carbon from the atmosphere.