Brazil forms ETS competitiveness working group, examines CBAM and leakage risks

## OzelCarbonOS VCM Intelligence Brief — 18 October 2026 **Brazil's Falling Deforestation & REDD+ Supply Outlook.** Government satellite data show Amazon deforestation declined more than 40% and Cerrado deforestation more than 20% over the latest annual period, both reaching record lows ([source](https://carbon-pulse.com/561624/)). For the voluntary carbon market this is a double-edged signal: sustained reductions validate the efficacy of jurisdictional REDD+ programmes and bolster the credibility narrative that IC-VCM and ART TREES have been pushing, but they also tighten the pipeline of new avoided-deforestation credits. Buyers benchmarking REDD+ against removal-based credits (ARR, biochar, BECCS) should watch whether Brazil's planned ETS competitiveness working group — which will examine leakage and carbon border adjustment mechanisms — eventually channels forest protection into compliance-grade supply, further constraining voluntary availability ([source](https://carbon-pulse.com/561595/)). **Policy Cross-Currents: IPCC Delays, COP17, and Climate Finance.** The suspension of the IPCC's 65th plenary over timeline disagreements threatens to leave gaps in the science base ahead of the 2028 Global Stocktake, a key input for Article 6 rule refinement and CORSIA baseline recalculations ([source](https://carbon-pulse.com/561587/)). Meanwhile, world leaders gathering in Yerevan ahead of COP17 are demanding faster delivery on Kunming-Montreal biodiversity targets and more finance — a call that could boost demand for nature-based VCM credits carrying biodiversity co-benefits from standards such as Gold Standard and Verra's CCB add-on ([source](https://carbon-pulse.com/561509/)). Climate finance also remained a live issue at the IMF–World Bank annual meetings in Bangkok despite US headwinds, with tax reform and energy security framing the conversation ([source](https://carbon-pulse.com/561507/)). **Compliance Markets & CBAM Spillovers into VCM.** On the compliance side, CFTC positioning data reveal regulated producers adding net-long exposure in California (CCA) and RGGI (RGA) V26 futures, suggesting confidence in tightening caps ([source](https://carbon-pulse.com/561493/)). In Europe, the Commission will update its ETS2 impact assessment as energy-price politics intensify ([source](https://carbon-pulse.com/561307/)), and CBAM implementation is already reshaping trade flows: importers are pivoting to suppliers in countries with lower default emissions values ([source](https://carbon-pulse.com/561477/)), while Northern Ireland goods have been formally exempted ([source](https://carbon-pulse.com/561492/)). For VCM participants, rising compliance costs in the EU and North America continue to set a floor under voluntary credit prices, particularly for high-integrity removal credits that corporates can stack alongside allowance obligations. **Nature & Biodiversity Investment Gap.** Analysis of Canadian corporate sentiment shows that while sustainability budgets are broadly stable, nature and biodiversity remain a low investment priority ([source](https://carbon-pulse.com/561556/)). This mirrors a wider market pattern: despite growing registry issuance of biodiversity-tagged credits, corporate procurement still gravitates toward energy-transition methodologies (cookstoves, renewable energy). Bridging this gap will likely require clearer quantification of biodiversity outcomes within Verra VCS and Gold Standard frameworks, and potentially price incentives via Article 6 or CORSIA eligibility lists that reward nature-positive removals.