Vientiane Capital, Lao PDR – May 28, 2025
The Lao government, through the signature of H.E. Prime Minister Sonexay Siphandone, has adopted the Carbon Credit Decree, representing a landmark step toward maximizing the flow of carbon revenue to the country.
The decree establishes the legal foundation to govern carbon markets by defining the principles, regulations, and measures for the management and monitoring of carbon credit activities. It applies to individuals, legal entities, and organizations engaged in or related to carbon credit activities within the Lao PDR.
By adopting the decree, Lao PDR has joined a number of early movers in Asia and the Pacific that have taken action to introduce domestic regulatory frameworks to participate in international carbon markets.
International carbon markets are a key tool for reducing greenhouse gas emissions cost-effectively. Participating in carbon markets can benefit countries seeking to drive low-carbon development, particularly those with limited resources, significant socio-economic development needs, and high potential for emissions reductions and removals—such as Lao PDR.
Mr. Syamphone Sengchandala, Director General of the Department of Climate Change, commented:
“The decree has been developed to ensure efficiency and effectiveness across carbon markets, mobilize funding from the international community, and generate benefits for the state, individuals, legal entities, and organizations. This is a major step toward addressing climate change in partnership with the global community while promoting socio-economic development aligned with green and sustainable practices.”
These steps are essential to ensuring that carbon markets function effectively and contribute to the broader goal of mitigating climate change under the Paris Agreement. By setting clear rules and standards, regulations can enhance transparency, accountability, and efficiency in carbon markets, making it easier for businesses to participate and invest in sustainable practices.
As outlined in the decree, the implementation of carbon credit activities in Lao PDR broadly requires carbon project developers to seek project approval from line ministries before registering their projects with the Ministry of Agriculture and Environment (MAE), which acts as the lead agency. The decree provides a clear institutional framework for managing carbon credit activities and sets out measures to reduce greenhouse gas emissions effectively. It helps ensure environmental integrity by preventing fraudulent activities and requiring that carbon credits represent real, measurable reductions in emissions.
Ms. Dagmar Zwebe, GGGI Lao PDR Country Representative, shared:
“This decree is a testament to the power of leadership and the shared commitment of the Government of Lao PDR to addressing climate change by leveraging international carbon markets. We must now work together to operationalize this decree and open new avenues for Lao PDR to attract carbon finance, invest in green projects, and enhance the well-being of its people.”
The Global Green Growth Institute (GGGI), with support from the Australian Department of Foreign Affairs and Trade (DFAT) under the Open and Sustainable Carbon Markets Program, has provided technical and capacity-building support to the government in preparing and adopting this decree.
Ms. Benita Sommerville, Australia’s Deputy Head of Mission to Lao PDR, stated:
“The Government of Lao PDR has been instrumental in leading efforts to develop and implement this decree. Their dedication and leadership have been crucial in ensuring that Lao PDR can effectively participate in the global carbon market and benefit from the financial opportunities it offers. As climate change is at the heart of Australia’s international development policy, we look forward to continued engagement to support Lao PDR in tapping into carbon market opportunities.”
The GGGI project is strengthening policies, institutions, and systems for carbon markets. This includes developing carbon project approval and management guidelines, an international carbon trading strategy, and a national carbon registry. Additionally, the project is building a national Article 6 project pipeline and providing technical assistance to private and community-level project developers to bring carbon projects to market.