Pakistan, Norway seal first-ever carbon market deal under Paris climate pact

Pakistan and Norway on Wednesday signed the country’s first landmark bilateral agreement under Article 6.2 of the Paris Agreement, opening the door to international carbon trading, climate finance and major investment in clean energy and climate-smart agriculture.

The memorandum of understanding, signed in Islamabad under the auspices of the Ministry of Climate Change and Environmental Coordination, marks Pakistan’s formal entry into the global carbon market and is being seen as a breakthrough in the country’s climate diplomacy.

Minister for Climate Change and Environmental Coordination Musadik Malik termed the agreement a “historic milestone”, saying it would shift Pakistan from carbon market preparedness to practical implementation.

Read: Pakistan urged to go low-carbon

“This is Pakistan’s first bilateral agreement under Article 6.2 and an important step towards implementation,” Malik said. “It creates a credible pathway for international cooperation and investment in Pakistan’s climate priorities.”

Under the agreement, Pakistan will be able to develop carbon-credit generating projects in sectors such as clean energy, agriculture, transport and waste management and potentially sell the resulting emission reductions to Norway.

Officials said the deal would help channel international finance into Pakistan at a time when the country was grappling with recurring floods, heatwaves and other climate shocks.

Malik said the agreement would strengthen Pakistan’s position in international carbon markets and create new opportunities for the country’s emerging green economy.

“Carbon markets cannot be treated as an end in themselves,” he said.

“They must help countries like Pakistan finance transition pathways, create jobs, attract technology and deliver real benefits to communities.”

The minister said Pakistan had already put in place the country’s first national policy guidelines for carbon trading, approved by the federal cabinet in January 2025, and was now moving to establish rules, reporting systems and bilateral arrangements needed to operationalise the market.

He said Pakistan had “strong mitigation potential” in sectors such as renewable energy, agriculture, transport and waste management, and that the agreement would encourage project developers and investors to move forward.

Also Read: Earning carbon credits in Pakistan

Addressing the signing ceremony, Norway’s Ambassador to Pakistan Per Albert Ilsaas said the accord marked the beginning of a new era in bilateral environmental cooperation.

“Pakistan is among the countries most affected by climate change, and we believe this partnership can deliver both measurable emission reductions and real development benefits,” he said.

The ambassador said Norway, which aims to become climate neutral by 2030, was seeking to purchase Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6, not to meet its formal climate targets but to go beyond them.

“Norway is not purchasing ITMOs to meet its nationally determined contribution targets. We are purchasing them to achieve climate neutrality beyond those commitments,” he said.

Ilsaas said Norway’s Global Emission Reduction Initiative, launched in 2024 with a budget of $1.5 billion approved by the Norwegian parliament, would provide carbon finance to countries such as Pakistan.

“Through NOGER, we want to channel carbon finance into countries such as Pakistan and help bridge the gap in climate mitigation finance,” he said.

He added that Norway was looking beyond individual carbon-credit projects and was interested in large-scale programmes in renewable energy, industry and agriculture.

“We are looking beyond individual projects,” the ambassador said. “We are interested in cooperation across entire sectors where climate policies can generate emission reductions at scale.”

Read: UN approves first carbon credits under Paris Agreement

The ambassador said Norway had already signed similar agreements with Benin, Indonesia, Zambia, Jordan and Senegal and was working to buy 15 million carbon credits by 2030.

He also invited Pakistan to present a broader pipeline of projects, specifically pointing to renewable energy ventures such as the Zhenfa 100-megawatt solar project and the Indus wind energy project as possible candidates for future cooperation.

Both sides also agreed that the new ambitious pact could significantly boost Pakistan’s access to climate finance and private-sector investment, while helping the country pursue low-carbon growth and meet its climate commitments under the Paris Agreement.