Charcoal is one of the main sources of energy used in the production of pig iron for steel in Brazil. The vast majority of the current charcoal production is from unsustainable and often illegal harvest of native forests, leading to severe environmental degradation and deforestation. However, there have been successful business cases of forest plantation for charcoal production in Brazil, including one Clean Development Mechanism (CDM) project financed by the Prototype Carbon Fund in Minas Gerais. Expanding the area of forest plantations for charcoal on idle or degraded pasture land would reduce the pressure on native forests in Brazil.
However, barriers have prevented wide adoption of forest plantations for charcoal. Some of the barriers include: