Pakistan has taken a major step in its climate diplomacy by signing its first-ever bilateral carbon market agreement with Norway under the framework of the Paris Agreement, paving the way for international carbon trading, climate finance, and green investment.
The memorandum of understanding, signed in Islamabad under Article 6.2 of the global climate pact, formally brings Pakistan into the international carbon market. The agreement is being viewed as a significant breakthrough that could unlock new financial flows for climate action and sustainable development.
Federal Minister for Climate Change and Environmental Coordination, Musadik Malik, described the development as a “historic milestone,” noting that Pakistan is now transitioning from policy preparation to practical implementation in carbon trading.
“This agreement creates a credible pathway for international cooperation and investment in Pakistan’s climate priorities,” he said, adding that it would enable the country to move forward with concrete climate projects.
Under the deal, Pakistan can develop carbon-credit generating initiatives in sectors such as renewable energy, agriculture, transport, and waste management. The emission reductions achieved through these projects can then be sold to Norway, creating a new revenue stream while supporting environmental goals. Officials believe the agreement comes at a critical time, as Pakistan continues to face increasing climate-related challenges, including floods and extreme heat. By tapping into international carbon finance, the country hopes to strengthen its resilience while advancing its transition to a low-carbon economy.
Mr Malik emphasized that carbon markets should serve broader development goals rather than being treated as an end in themselves.
“They must help countries like Pakistan finance transition pathways, create jobs, attract technology, and deliver tangible benefits to communities,” he said. Pakistan has already laid the groundwork for such initiatives, with national carbon trading guidelines approved in early 2025. The government is now working to establish the regulatory systems and reporting mechanisms needed to operationalize the market. Speaking at the signing ceremony, Norway’s Ambassador to Pakistan, Per Albert Ilsaas, said the agreement marked the beginning of a new phase in bilateral environmental cooperation. “Pakistan is among the countries most affected by climate change, and this partnership can deliver both measurable emission reductions and real development benefits,” he said. He noted that Norway aims to achieve climate neutrality by 2030 and is seeking to go beyond its formal commitments by purchasing Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.
