On Wednesday, Pakistan and Norway formalized a landmark bilateral agreement, marking Pakistan’s inaugural entry into the global carbon market under the Paris Agreement framework. This historic deal, signed in Islamabad, opens avenues for international carbon trading, climate finance, and significant investments in clean energy and climate-smart agriculture.
The Paris Agreement, adopted by world leaders at the UN Climate Change Conference (COP21) on December 12, 2015, commits countries to reduce emissions and collaborate on climate adaptation, with a mechanism to enhance these commitments over time. Pakistan’s new agreement falls under Article 6.2 of this pact, facilitating international cooperation through carbon markets.
The memorandum of understanding (MoU) signed under the Ministry of Climate Change and Environmental Coordination signifies Pakistan’s formal induction into the global carbon market, a milestone hailed as a breakthrough in the nation’s climate diplomacy efforts.
Under this agreement, Pakistan can develop projects that generate carbon credits across sectors including clean energy, agriculture, transport, and waste management. These emission reductions can potentially be sold to Norway, promoting sustainable development and climate mitigation.
Climate Change Minister Musadik Malik described the agreement as a “historic milestone” that transitions Pakistan from preparatory stages to active implementation of carbon market mechanisms. Malik emphasized that this first bilateral deal under Article 6.2 establishes a credible framework for international cooperation and investment aligned with Pakistan’s climate priorities.
He further highlighted that the pact will bolster Pakistan’s role in global carbon markets and foster growth in the country’s emerging green economy. Malik stressed that carbon markets should facilitate financing for transition pathways, job creation, technology acquisition, and tangible community benefits rather than being an end goal themselves.
Pakistan has already developed its first national policy guidelines for carbon trading, approved by the federal cabinet in January 2025. The government is now focused on setting up the necessary regulations, reporting systems, and bilateral arrangements to operationalize the market effectively.
With strong mitigation potential in renewable energy, agriculture, transport, and waste management sectors, the agreement is expected to encourage project developers and investors to advance climate initiatives within Pakistan.
Norway’s Ambassador to Pakistan, Per Albert Ilsaas, noted that the agreement marks the start of a new chapter in bilateral environmental collaboration. He acknowledged Pakistan as one of the countries most vulnerable to climate change and expressed confidence that this partnership will yield measurable emission reductions alongside developmental benefits.
Ilsaas clarified that Norway aims to achieve climate neutrality by 2030 and is purchasing Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 not to fulfill its formal climate targets but to exceed them. This approach reflects Norway’s commitment to going beyond its nationally determined contributions.
The ambassador highlighted Norway’s Global Emission Reduction Initiative, launched in 2024 with a $1.5 billion budget, which intends to channel carbon finance to countries like Pakistan, bridging gaps in climate mitigation funding.
Norway is focusing on large-scale programs in renewable energy, industry, and agriculture rather than isolated carbon-credit projects. Ilsaas invited Pakistan to propose a broader portfolio of projects, citing the Zhenfa 100-megawatt solar project and the Indus wind energy project as promising candidates for future cooperation.
