Pakistan and Norway Seal First-Ever Carbon Market Deal Under Paris Climate Pact

ISLAMABAD — Pakistan and Norway signed a historic bilateral agreement on Wednesday under Article 6.2 of the Paris Agreement, marking Pakistan's official entry into the global carbon market. The landmark memorandum of understanding (MoU) was finalized in Islamabad to unlock international carbon finance, clean energy investments, and climate-smart agricultural initiatives.

The agreement serves as a critical breakthrough in the nation’s climate diplomacy, shifting the country from market preparation to active implementation. By establishing a framework for Internally Transferred Mitigation Outcomes (ITMOs), Pakistan can now monetize its emission reductions while attracting foreign capital to combat recurring environmental shocks like floods and heatwaves.

Unlocking Green Investment and Clean Energy

Federal Minister for Climate Change Musadik Malik hailed the accord as a "historic milestone" for the national economy. The minister emphasized that the deal provides a credible pathway for high-impact projects in sectors including:

• Renewable Energy: Solar and wind power scaling.

• Climate-Smart Agriculture: Sustainable farming and soil management.

• Waste Management: Emissions reduction through industrial efficiency.

• Transport: Transitioning to low-carbon transit systems.

“Carbon markets must help countries like Pakistan finance transition pathways and deliver real benefits to communities,” Malik stated. He noted that the federal cabinet’s approval of national carbon trading guidelines in January 2025 paved the way for this operational breakthrough.

Norway’s Global Emission Reduction Initiative

Norwegian Ambassador Per Albert Ilsaas confirmed that Norway aims to achieve climate neutrality by 2030. Through the Global Emission Reduction Initiative (NOGER)—backed by a $1.5 billion budget—Norway seeks to purchase carbon credits to exceed its formal climate targets rather than simply meeting them.

Norway has already established similar partnerships with nations like Indonesia and Senegal, aiming to secure 15 million carbon credits by 2030. Ilsaas invited Pakistan to present large-scale project pipelines, specifically citing the Zhenfa 100MW solar project and the Indus wind energy project as prime candidates for future cooperation.

A New Era for Pakistan’s Climate Finance

This partnership is expected to bridge the significant gap in climate mitigation finance for Pakistan. By leveraging private-sector investment, the deal supports the country's pursuit of low-carbon growth while fulfilling its international commitments under the Paris Climate Pact.