Accounting Choices and Financial Position in Brazilian Carbon Credit Markets

Abstract

In Brazil, two systems carbon credits coexist: the voluntary market for carbon credits in general, and the regulated market specifically for the fuel sector. This article aims to investigate the absence of accounting standards in voluntary and regulated carbon credit markets in Brazil, and its consequences on the reported financial position according to the economic interests of the agents involved in the markets. A positive and qualitative approach was applied to describe and analyze cases of carbon credit accounting practices of purchasing and selling companies. The cases studied recognized carbon credit assets as inventory, as intangible and as financial assets, although the characteristics of carbon credits do not qualify them under the current classifications. The results highlight different economic interests in voluntary and regulated markets that lead to the respective accounting choices linked to them. The research contributes to strengthening the scientific arguments on the accounting of carbon credits.