Pakistan has formalized its inaugural bilateral carbon market agreement under the Paris Agreement with Norway, marking a significant advancement in attracting climate finance. The memorandum of understanding (MoU), signed by the Ministry of Climate Change and Environmental Coordination, will facilitate Pakistan’s development of carbon credit initiatives and the transfer of emission reductions to Norway.
Minister for Climate Change and Environmental Coordination Musadik Malik hailed the pact as a “historic milestone,” emphasizing that it represents Pakistan’s transition from preparing for carbon markets to actual implementation. He highlighted that this is the country’s first bilateral agreement under Article 6.2 of the Paris Agreement and a crucial step toward fostering international collaboration and investment in climate-related sectors.
Under this framework, Pakistan will be able to generate carbon credits through projects spanning renewable energy, agriculture, transportation, and waste management. These credits can then be traded as internationally transferred mitigation outcomes (ITMOs). The agreement arrives amid escalating climate challenges in Pakistan, including severe floods and heatwaves, and is expected to help mobilize international funding to address these risks.
Malik stressed that carbon markets should align with broader economic and social objectives, stating that they must support countries like Pakistan in financing transition pathways, generating employment, attracting technology, and delivering tangible benefits to communities. He also noted that Pakistan had approved national policy guidelines for carbon trading in January of the previous year and is currently establishing the necessary regulatory and reporting frameworks to operationalize the market.
At the signing ceremony, Norway’s Ambassador to Pakistan, Per Albert Ilsaas, described the agreement as ushering in a new era of bilateral environmental cooperation. He pointed out that Pakistan is among the nations most vulnerable to climate change and expressed confidence that this partnership would yield both measurable emission reductions and significant development benefits.
Ilsaas explained that Norway aims to achieve climate neutrality by 2030 and plans to purchase ITMOs not to fulfill its nationally determined contribution targets but to exceed them. He further revealed that Norway’s Global Emission Reduction Initiative, launched in 2024 with a $1.5 billion budget, will support carbon finance efforts in partner countries, including Pakistan.
The ambassador emphasized Norway’s interest in broad, large-scale cooperation across sectors such as renewable energy, industry, and agriculture, rather than focusing solely on isolated projects. Officials from both countries agreed that this agreement could enhance Pakistan’s access to climate finance and private investment, while advancing efforts toward low-carbon economic growth and fulfilling its Paris Agreement commitments.
