Pakistan, Norway sign first bilateral carbon market deal under Paris Agreement

ISLAMABAD: Pakistan has signed its first bilateral carbon market agreement under the Paris Agreement with Norway, marking a significant step towards attracting climate finance and boosting environmental cooperation, an official statement said on Wednesday.

The memorandum of understanding, signed under the Ministry of Climate Change and Environmental Coordination, will allow Pakistan to develop carbon credit projects and transfer emission reductions to Norway.

Minister for Climate Change Musadik Malik termed the agreement a “historic milestone,” saying it reflects Pakistan’s transition from carbon market preparedness to implementation.

“This is Pakistan’s first bilateral agreement under Article 6.2 and an important step towards implementation,” he said, adding that it would open avenues for international investment in climate-related sectors.

Under the deal, Pakistan will be able to generate carbon credits through projects in renewable energy, agriculture, transport, and waste management. These credits can be traded as internationally transferred mitigation outcomes (ITMOs).

Officials noted that the agreement comes as Pakistan faces increasing climate challenges, including floods and heatwaves, and could help mobilise much-needed international funding.

Malik emphasised that carbon markets must support broader economic and social goals, including job creation, technology transfer, and community-level benefits.

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He added that Pakistan had already approved national policy guidelines for carbon trading and is now working to establish regulatory and reporting systems to operationalise the market.

Speaking at the ceremony, Norway’s Ambassador to Pakistan Per Albert Ilsaas said the agreement marks a new phase in bilateral environmental cooperation.

He noted that Pakistan is among the countries most vulnerable to climate change and expressed confidence that the partnership would deliver measurable emission reductions along with development benefits.

Ilsaas added that Norway, aiming for climate neutrality by 2030, is seeking to purchase ITMOs beyond its formal climate commitments.

He also highlighted Norway’s Global Emission Reduction Initiative, launched in 2024 with a $1.5 billion budget, as a key mechanism to channel carbon finance to partner countries, including Pakistan.

Officials from both sides said the agreement is expected to enhance Pakistan’s access to climate finance and private investment while supporting its transition towards low-carbon growth.