Brazil’s new carbon market could experience “huge” growth in the next eight years, as the government seeks to curb emissions from deforestation and industry.

That is the bullish prediction of some of Brazil’s leading economists, who are also looking to the UK for advice in developing a successful emissions trading scheme.

Speaking to reporters at Sao Paulo’s FGV school of economics, Mario Monzoni, founder and director of sustainability studies, predicted a cap-and-trade scheme would be the most important mechanism to cut emissions from deforestation.

“We spend most of our days talking about cap and trade in Brazil,” he said. “We need some conditions to do it, such as carbon inventories, which help to create the demand for credits.

“Nobody wants to be on the demand side. Everybody wants to sell. If there’s no demand there’ll be no market. But I believe in the next eight years in Brazil, we’re going to develop a huge cap-and-trade market for carbon.”

Deforestation currently accounts for around 80 per cent of Brazil’s greenhouse gas emissions, driven by the growth of agri-businesses including cattle farming, soya bean and sugar cane.

Brazil’s first government-backed carbon trading scheme, Bolsa Verde do Rio de Janeiro (BVRio), was launched in December last year. Last week it opened pre-registrations for a new forestry credit market, which can be used by farmers to comply with the country’s Forestry Code.

The code requires landowners to retain certain levels of vegetation on their land, but those with more forest than the legal minimum would be able to sell it as a carbon credit to those falling short of the minimum requirement.

“I believe it will be the biggest way of driving down deforestation,” said Monzoni. “There are two ways: either people don’t deforest because it is not right, but I don’t think we have reached this level of civilisation yet.

“So we need our second-best solution which are economic instruments, such as taxation and permits. I think in Brazil we’re going to work much more on permits in cap-and-trade than taxation.”

He added that Brazil had been working with the UK to develop a carbon scheme that enables economic and environmental growth. It is also considering a scheme based on carbon intensity that would monitor emissions relative to economic growth, rather than actual emissions figures.

“I think everything in Brazil is going to start on a voluntary basis. The UK has lots of lessons to learn and we have too – for instance here in Brazil we are discussing a carbon market based on carbon intensity,” he added.

His bullish forecasts were echoed by Gustavo Loyola, former president of Brazil’s central bank. In a separate interview in Sao Paulo he told reporters that financial mechanisms such as cap-and-trade would be crucial to cutting emissions in Brazil.

“I think Brazilian society is concerned generally about the environment and is paying more attention to it,” he said. “As a latecomer, we need to consider the idea of preserving nature and growth.

“The way to conciliate these is two ideas – growth with conservation of the environment – is to use mechanisms to reduce carbon emissions. So I think Brazil is one of the few countries in the world that could benefit from this kind of mechanism.”