Kathmandu: Nepal is set to strongly advocate for assured international market access for carbon credits at the upcoming United Nations Climate Change Conference (COP31), aiming to make carbon trading more accessible, effective and financially rewarding for developing countries.
The government has incorporated issues related to carbon credit market access, trade facilitation and benefit-sharing into its national position paper for the conference, which begins next Monday (November 9) in Antalya, Türkiye.
Carbon market development has been included among Nepal’s key agenda items in the position paper. The country plans to push for the effective implementation of Article 6 of the Paris Agreement, adopted at COP21 in Paris in 2015, which provides the legal and technical framework for international carbon markets, climate cooperation and carbon credit trading.
According to Dr Maheshwar Dhakal, chief of the Climate Change Management Division under the Ministry of Forests and Environment, Nepal’s position paper has been prepared to encourage stronger implementation of the provisions outlined in the Paris Agreement.
“If the provisions on carbon trading are effectively implemented, Nepal could gain greater opportunities to trade its accumulated carbon credits in international markets,” he said.
Nepal’s Key Demands
Under its COP31 position paper, Nepal has called for recognising Article 6 of the Paris Agreement as a source of supplementary climate finance rather than a substitute for developed countries’ climate-finance commitments.
The document also seeks expanded partnerships under Article 6.2, building on Nepal’s existing cooperation with Sweden and the Republic of Korea. Nepal has urged support for concluding additional bilateral carbon-trading arrangements with other countries.
The position paper further stresses the need for financial support for early-stage technical assistance and project preparation, which would help facilitate project development, investment, approvals and credit transfers.
Nepal is also advocating measures to create predictable demand in carbon markets by encouraging buyer countries to commit to purchasing carbon credits generated in least-developed countries.
Dr Prakash Singh Thapa, chief of the Climate Change and Resilience Section, said the position paper places particular emphasis on reducing transaction costs in carbon trading.
The proposal calls for simplified procedures for both small and large community-based carbon reduction projects in least-developed countries, cost-effective mechanisms and standardised baselines.
It also proposes building domestic capacity for carbon project verification and certification through the development of skilled human resources and specialised institutions, helping reduce both costs and delays associated with carbon transactions.
In addition, Nepal has sought financial and technical assistance for the development and operation of a national carbon registry. The position paper highlights the need for support in cybersecurity, cross-border data exchange and the long-term management of carbon trading records.
Nepal has also stressed that cooperation under Article 6 should deliver benefits beyond carbon revenue, including technology transfer, human-capacity development and support for sustainable development.
The country has further called for greater emphasis on non-market approaches under Article 6.8 and the expansion of regional cooperation mechanisms.
Nepal believes that commitments by developed countries and other buyers to purchase high-quality carbon credits from least-developed countries would help attract investment in carbon projects and provide greater market certainty.
REDD+ expert Dr Shambhu Dangal said stronger implementation of the Paris Agreement through COP31 negotiations could help secure international markets for carbon credits generated by Nepal.
“At present, carbon trading is largely limited to voluntary markets. If broader international markets are established, Nepal will be able to sell carbon credits through more competitive mechanisms,” he said.
Nepal’s Carbon Emissions Profile
As a least-developed country, Nepal contributes relatively little to global greenhouse gas emissions but remains highly vulnerable to the impacts of climate change.
According to Nepal’s first Biennial Transparency Report (2025), the country emitted a total of 58.23 million metric tonnes of carbon dioxide equivalent greenhouse gases in 2022.
The forestry and land-use sector absorbed around 20 million metric tonnes of carbon dioxide, helping offset emissions. As a result, Nepal’s net greenhouse gas emissions stood at approximately 38.21 million metric tonnes of carbon dioxide equivalent.
The energy sector was the largest source of emissions, accounting for 25.01 million metric tonnes of carbon dioxide equivalent, followed by the agriculture sector with 23.59 million metric tonnes.
Progress in Carbon Trading
According to Dhirendra Kumar Pradhan, chief of the Carbon Management and REDD Forestry Centre, Nepal has already adopted the Carbon Trading Regulation 2025 (2082 BS) to provide a legal basis for the federal, provincial and local governments, as well as the private sector, to participate in national and voluntary carbon markets under the Paris Agreement and other international mechanisms.
He said Nepal has established its own national carbon registry, which enables registration, authorisation, transfer and tracking of carbon units through an online system.
Pradhan added that Nepal has also developed national arrangements covering methodologies, baselines, monitoring, reporting and verification (MRV), approvals and registry linkages required for participation in mechanisms under Article 6.4 of the Paris Agreement.
According to the centre, projects are currently being developed in renewable energy, electric mobility, energy efficiency, clean cooking technologies, waste management, agriculture and livestock, industry, sustainable forest management, REDD+ programmes and ecosystem restoration.
What is Carbon Trading?
Carbon trading is a market-based mechanism that assigns a financial value to reductions in greenhouse gas emissions or increases in carbon sequestration.
Forests absorb carbon dioxide from the atmosphere and store it in trees, soil and other biomass, helping reduce the concentration of greenhouse gases that contribute to climate change. Conversely, deforestation and forest degradation release stored carbon back into the atmosphere.
To address this challenge, Nepal has promoted REDD+ initiatives aimed at reducing deforestation and forest degradation, enhancing forest conservation, supporting sustainable forest management and increasing forest carbon stocks.
The reduction in emissions or additional carbon sequestration achieved through such activities can be measured, verified and reported, enabling countries to access international climate finance or carbon payments.
Carbon markets generally operate through two main mechanisms: compliance markets, which are regulated by governments or international agreements, and voluntary markets, where carbon credits are traded on a voluntary basis. Under REDD+, results-based payments through international funds and institutions are also widely used alongside direct carbon-credit transactions between buyers and sellers. — RSS
