Pakistan and Norway have signed the country’s first bilateral carbon market agreement under Article 6.2 of the Paris Agreement.

“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,” read an official statement.

The Paris Agreement was adopted at the UN Climate Change Conference (COP21) on December 12, 2015, committing countries to reduce emissions and cooperate on climate adaptation while strengthening targets over time.

Article 6.2 of the agreement allows countries to trade emission reductions with each other through bilateral arrangements. 

Under this mechanism, a country that reduces emissions beyond its target can transfer those reductions to another country, which can count them towards its own climate goals, subject to agreed accounting and transparency rules.

The statement noted that a memorandum of understanding (MoU) signed in Islamabad by the Ministry of Climate Change and Environmental Coordination marked Pakistan’s “formal entry into the global carbon market and is being seen as a breakthrough in the country’s climate diplomacy”.

Under the agreement, Pakistan will develop carbon credit-generating projects in sectors including clean energy, agriculture, transport and waste management, with the option to sell emission reductions to Norway.

Minister for Climate Change and Environmental Coordination Musadik Malik termed the agreement a “historic milestone”, stating that it moves Pakistan from carbon market preparedness to implementation.

“This step creates a credible pathway for international cooperation and investment in Pakistan’s climate priorities,” he said, adding that the agreement would support Pakistan’s position in international carbon markets and open avenues in the green economy.

Malik noted that national policy guidelines for carbon trading were approved by the federal cabinet in January 2025, with work underway on rules, reporting systems and bilateral arrangements.

Addressing the ceremony, Norway’s Ambassador to Pakistan Per Albert Ilsaas said that the agreement signals a new phase 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.

He noted that Norway’s target to achieve climate neutrality by 2030 and its interest in purchasing Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 to exceed climate goals.

Ilsaas stated that Norway’s $1.5 billion Global Emission Reduction Initiative, launched in 2024, would provide carbon finance to countries including Pakistan, focusing on large-scale programmes in renewable energy, industry and agriculture.

Both sides also agreed that the arrangement could improve Pakistan’s access to climate finance and investment while supporting low-carbon development and its commitments under the Paris Agreement.