UNFCCC Reference No.: 2569
The world's production of iron and steel is dominated by the use of coal coke. In Brazil, however, the possibility of cultivating renewable biomass on a sustainable basis could open a wide array of mitigation opportunities for the iron and steel production chain. Nonetheless, the country has been experiencing a chronic deficit of planted forests to supply the iron industry. Such a deficit, and the ensuing lack of renewable biomass, result either in the use of coal coke or non-renewable charcoal in the iron industry. For example, in the state of Minas Gerais and other neighboring States in Brazil, the use of non-renewable charcoal from legal and illegal logging puts pressure on native cerrado forests.
The Plantar Group, the World Bank's Prototype Carbon Fund and the BioCarbon Fund, with the support of Rabobank International, have been able to implement a successful pioneering project in the State of Minas Gerais, whereby the CDM enables the company to overcome the financial and economic barriers to establish new biomass plantations. Started in 2001, this is one of the first carbon finance projects developed, before the Kyoto Protocol entered into force. Without carbon finance, such plantations are neither economically viable nor is it possible for small-scale pig iron producers to obtain financing. More importantly, there is no other financial incentive to set aside large areas of native cerrado forests.
The Plantar Project creates emission reductions by: (i) reforesting 11,600 ha of deforested and abandoned pasture lands with sustainably managed and independently-certified plantations and (ii) uses renewable charcoal - a solid biofuel from new and additional planted forests - instead of coal coke in pig iron production. As a result, the company has become the first in the world capable of producing iron totally based on the use of renewable charcoal, with several additional environmental and social benefits. Today, the Plantar Project has become a model in the Brazilian iron industry. It has provided the basis for the integration of the CDM with several public policies, at the state and federal levels, aimed at promoting sustainable development and climate change mitigation. Particularly, it is paving the way for the State of Minas Gerais to promote the adoption of this project model to help achieve the State's goal of increasing the use of renewable charcoal in these sectors and contribute to the larger goal of reducing greenhouse gas emissions.
The project demonstrates how sustainably managed plantations can generate new carbon stock and substitute the use of fossil fuels. It also shows how the private sector can use previously deforested and abandoned lands to help take the pressures off native forests, thereby promoting the conservation of these forests and their unique biodiversity. The project is also securing high-quality employment in rural areas with few other employment opportunities and prioritizing the hiring of local and neighboring residents.