Portugal Launches National Voluntary Carbon Market with New Digital Platform

New Market Aims to Accelerate Climate Action

The Portuguese government has officially launched its national voluntary carbon market (VCM), introducing a new digital platform designed to facilitate the registration and transaction of carbon credits. This initiative marks a significant step in Portugal's commitment to mitigating greenhouse gas (GHG) emissions and achieving its climate targets.

The legal framework for this market was established by Decree-Law 4/2024 of January 5, which came into force on January 6, 2024. The market's primary objectives include contributing to the reduction of GHG emissions within the national territory and fulfilling Portugal's national, European, and international climate commitments, aligning with the goals set out in the Roadmap for Carbon Neutrality 2050.

Digital Platform and Credit Mechanics

The newly launched digital platform is central to the market's operation. It will enable market participants to register and will eventually include functionalities for the issuance, transfer, and cancellation of carbon credits. The first approved methodology for the market focuses specifically on the expansion of forest carbon sinks.

Under the VCM, one carbon credit corresponds to one tonne of CO2 reduced or sequestered. These credits can take two forms: future carbon credits, issued based on project estimates, or verified carbon credits, issued after an effective reduction in GHG emissions or carbon sequestration has occurred. The market aims to generate economic incentives to promote projects that reduce GHG emissions or sequester carbon, thereby catalyzing private sector investments in climate action.

Project Focus and Oversight

The Portuguese VCM encourages the development of projects within Portugal, with a strong emphasis on nature-based solutions. Special attention is given to blue carbon and forest-related projects, though engineered removals are also mentioned. Projects submitted to the Portuguese VCM cannot be simultaneously submitted to other similar national or international trading systems.

The Portuguese Environment Agency (APA) plays a crucial role in the market's oversight, being responsible for setting the methodology for calculating carbon credits and approving project methodologies. A technical committee has also been established to develop and evaluate these methodologies. The market is designed to ensure quality, transparency, and traceability in the use of carbon credits, aiming to prevent 'greenwashing' and increase investor confidence.

Towards Carbon Neutrality

The establishment of this voluntary carbon market is a strategic move by Portugal to enhance its climate action efforts. By providing a robust framework for carbon credit transactions and fostering investment in emission reduction and sequestration projects, the country aims to accelerate its transition towards a carbon-neutral society by 2050. This market is also expected to align with the upcoming European Carbon Removal Certification Framework (CRCF), further integrating Portugal's efforts into broader European climate strategies.