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 investment in clean energy and climate-smart agriculture. The memorandum of understanding, signed under the Ministry of Climate Change and Environmental Coordination, marks Pakistan’s formal entry into the global carbon market.
Federal Minister for Climate Change and Environmental Coordination Musadik Malik described the agreement as a historic milestone, stating that it shifts Pakistan from carbon market preparedness to practical implementation and creates a credible pathway for international cooperation and investment in climate priorities.
Under the agreement, Pakistan will be able to develop carbon-credit generating projects across sectors such as clean energy, agriculture, transport and waste management, and potentially sell the resulting emission reductions to Norway. Officials said the arrangement is expected to help channel international finance into Pakistan at a time when the country faces recurring climate-related challenges including floods and heatwaves.
The minister noted that Pakistan has already approved its first national policy guidelines for carbon trading in January 2025 and is now working on establishing rules, reporting systems and bilateral frameworks required to operationalise the carbon market. He added that Pakistan has strong mitigation potential in renewable energy, agriculture, transport and waste management, which could attract investors and project developers.
Norway’s Ambassador to Pakistan, Per Albert Ilsaas, termed the agreement the beginning of a new phase in bilateral environmental cooperation, emphasizing that Pakistan is highly vulnerable to climate change and that the partnership aims to deliver both emission reductions and development benefits. He said Norway, aiming for climate neutrality by 2030, will purchase Internationally Transferred Mitigation Outcomes (ITMOs) to go beyond its formal commitments rather than meet its core targets.
He further highlighted Norway’s Global Emission Reduction Initiative, launched in 2024 with a budget of $1.5 billion, which will support carbon finance in partner countries including Pakistan. Norway has already signed similar agreements with several countries and plans to expand its carbon credit purchases in the coming years.
Both sides expressed confidence that the agreement will enhance Pakistan’s access to climate finance, encourage private sector participation, and support the transition toward low-carbon economic growth while contributing to global climate goals under the Paris framework.