ISLAMABAD: Pakistan has entered into its first bilateral carbon market agreement with Norway, marking a significant milestone in its efforts to attract climate finance, according to an official statement released on Wednesday.
The memorandum of understanding (MoU), facilitated by the Ministry of Climate Change and Environmental Coordination, will enable Pakistan to develop projects that generate carbon credits and transfer emission reductions to Norway. This marks a pivotal move from preparing for carbon markets to actively implementing them.
Pakistan’s Climate Change Minister Musadik Malik called the deal a “historic achievement,” emphasizing that it signifies the country’s transition from readiness to practical action under the Paris Agreement’s Article 6.2. Malik stated that the agreement paves the way for international collaboration and investment in climate-friendly sectors.
The arrangement allows Pakistan to generate carbon credits through initiatives in renewable energy, agriculture, transportation, and waste management. These credits can be traded as internationally transferred mitigation outcomes (ITMOs). Officials noted that this deal comes at a crucial time as Pakistan faces escalating climate-related challenges, including devastating floods and record-breaking heatwaves. The agreement is expected to help mobilize international funding to address these issues.
Malik underlined that carbon markets should serve broader economic and social objectives, helping Pakistan finance its transition to cleaner energy, create jobs, attract new technologies, and deliver tangible benefits to local communities.
He also highlighted that Pakistan had already established national policy guidelines for carbon trading in January last year and is now working on building the necessary regulatory and reporting systems to operationalize the market.
During the signing ceremony, Norway’s Ambassador to Pakistan, Per Albert Ilsaas, described the agreement as a new chapter in bilateral environmental cooperation. He acknowledged Pakistan’s vulnerability to climate change and expressed confidence that the partnership could deliver measurable emission reductions and development gains.
Ilsaas noted that Norway, which aims to achieve climate neutrality by 2030, plans to purchase ITMOs not solely to meet its climate commitments but to go beyond them in pursuit of greater environmental goals. The ambassador added that Norway’s Global Emission Reduction Initiative, launched in 2024 with a $1.5 billion fund, will support carbon finance flows to partner nations like Pakistan.
Norway’s focus is on large-scale cross-sector collaboration spanning renewable energy, industry, and agriculture, rather than isolated projects. Officials from both countries expressed optimism that this agreement will boost Pakistan’s access to climate financing and private investments, aiding the country’s efforts to pursue low-carbon growth and fulfill its commitments under the Paris Agreement.
