The project aims to support the Ministry of Environment and Sustainable Development (MADES) to operationalize Paraguay’s National Carbon Market Framework. This will be achieved through a combination of awareness-raising, knowledge-sharing, capacity-building, assistance in the creation of policies and regulatory frameworks, and mitigation activity pipeline development interventions.

Ultimately, these efforts will enable Paraguay to accomplish carbon transactions under Article 6 of the Paris Agreement, including GGGI’s Carbon Fund members under the Carbon Transaction Facility. For Paraguay, Article 6 is a unique opportunity to fund the country’s ambitious Nationally Determined Contribution’s targets.

The project aims to support Paraguayan stakeholders and institutions in effectively regulating carbon markets activities while creating an enabling environment for private sector investment in climate action. Key objectives include:

Raising awareness and enhancing technical capacity on Article 6 strategies and governance frameworks.

Developing governance frameworks and institutional capabilities for carbon trading.

Identifying mitigation activities and designing Mitigation Activity Idea Notes (MAINs).

Article 6 of the Paris Agreement enables countries to trade Internationally Transferred Mitigation Outcomes (ITMOs) from mitigation activities that would have not occurred without carbon finance. Through international cooperation, Article 6 supports increased climate ambition and accelerates climate action globally.

In 2023, the new Paraguay government passed Law 7190, creating a framework for carbon markets. While the law creates the opportunity to trade carbon credits, it was principally designed for the Voluntary Carbon Market.

However, gaps still exist for Paraguay to be able to fully engage confidently in international carbon trading under Article 6 of the Paris Agreement. As such, GGGI aims in reinforcing its governance framework but also its overall capacity in participating in this global market through this project.