Article 6.2 of the Paris Agreement allows countries to trade emissions reductions bilaterally. This means that if a country is not utilising its allocated carbon units, it can trade or sell them to another country in exchange for finance, technology, technical expertise, etc.
The buyer country purchases these units, known as Internationally Transferred Mitigation Outcomes (ITMOs), to address any gaps in meeting its own climate goals.
Pakistan’s contribution to global carbon emissions is less than one per cent, but it is among the top ten countries most affected by climate change. Pakistan is a victim of frequent floods, glacier melting and droughts, with increasing frequency and intensity, which are negatively impacting its socio-economic structure. To counter these climate-related disasters, Pakistan requires finance, technology and expertise to mitigate and adapt to climate change.
Pakistan is an ideal country to benefit from Article 6.2 of the Paris agreement and trade its underutilised carbon units. The country also developed ‘Policy Guidelines for Trading in Carbon Market’ in 2024 to formally become part of the global carbon market.
Pakistan and Norway signed the former’s first historical bilateral agreement under Article 6.2 of the Paris Agreement at the start of April 2026. This is a formal entry of Pakistan into the global carbon market and trade mechanisms, opening new opportunities for economic development.
There are multiple positive aspects of this carbon deal. First of all, it will enhance the bilateral relations between Norway and Pakistan through climate diplomacy. This initiative will create a win-win situation for both countries.
Norway is one of the largest oil and gas producer country in Europe. It will help Norway to buy carbon credits from Pakistan and meet the market demand for carbon emissions and meet its climate change obligations. This deal will also help Norway meet its commitments under the Paris Agreement and its NDCs without compromising its economic activity.
For Pakistan, it is an important milestone that shows its commitment to implementing practical solutions to fight climate change. According to Minister for Climate Change and Environmental Coordination Musaddiq Malik, “It creates a credible pathway for international cooperation and investment in Pakistan’s climate priorities”. It will introduce Pakistan to global best practices of carbon trading and climate economic models. It will create investment opportunities in Pakistan and help in economic development.
Pakistan can also fill the gap in acquiring finances, technology and expertise to combat climate change disasters. In exchange for carbon credits, Pakistan can develop climate-resilient infrastructure, initiate renewable energy projects and take steps to restore and revive the forest sector through financing, technology and expertise gained from the deal. These projects will add more carbon credits to Pakistan’s account, which it can sell to other countries that are exceeding their limits.
All these initiatives will prepare Pakistan for disaster management and enhance resilience against climate change. This deal will also enhance Pakistan’s credibility as a potential market for carbon trading (Internationally Transferred Mitigation Outcomes, ITMOs).
The carbon trading mechanisms allow countries not only to meet their National Determined Contributions (NDCs) but also to raise their ambitions with less economic cost. The mechanism is supervised and monitored by a structured body that allows for the collection of verifiable, quantified data to track targets achieved under commitments. It enables the flow of funds towards decarbonisation. It is a fairer and more equitable system within and among the nations, not putting extra burden on developing nations and poor segments in the society. The bilateral agreement between Pakistan and Norway is an important step for both countries to benefit from the global carbon market system. It will help both countries meet their NDC targets and secure financing for green growth and development.
Pakistan should also engage in climate diplomacy to identify richer countries that are in dire need of additional carbon credits and can purchase them from Pakistan. Such a mechanism will enhance the credibility of Pakistan and other countries at the international level in fulfilling their obligations under the Paris Agreement and in accessing finance, technology and technical support to mitigate and adapt to climate change.
The writer is a graduate of the University of Oxford in Public Policy. She tweets/posts @zilehumma_1 and can be reached at: [email protected]
