PNG’s Carbon Market Regulation Initiative for Sustainable Development

By: Roselyn Erehe April 02, 2024

Papua New Guinea's Carbon Market Regulation Initiative promises significant benefits for local communities, as it negotiates for a 50- to 60-percent range of benefits from developers.

Guided by the Climate Change Development Authority (CCDA) under the Paris Agreement Act, these regulations aim to address climate change issues while ensuring economic stability.

CCDA Acting Managing Director Debra Sungi emphasized this during a recent presentation at a media press club themed “PNG Carbon Market Regulations.”

“The government put an entity in place to address and respond to the climate change issue without affecting economic change. CCDAs commitments have done internationally and have driven back results based on the issue,” Ms Sungi said.

The event, held on March 27th in Port Moresby, attracted a wide range of attendees, including national and international media, stakeholders, government regulators, and contractors.

CCDA's objective is to facilitate government oversight and assist PNG communities in negotiating with developers, prioritizing community needs and legally addressing disputes effectively.

The Climate Change Management Act of 2015 positioned PNG favorably to protect its forests and engage in carbon trading. This strategic direction, leading up to the 2021 Glasgow Summit and the subsequent approval of the Paris Agreement Rulebook, underlines PNG's commitment to global climate efforts.

The Paris Agreement is an act, and the Paris Agreement Rule Book provides the regulations on how to implement the articles of the Agreement. 

By incorporating mechanisms such as Reducing Emissions from Deforestation and Forest Degradation (REDD+), CCDA aligns its regulations with international standards, providing a framework for sustainable development.

Ms Sungi stated the importance of discussions in international forum to be inclusive of country challenges and identifying gaps.

“In a trading system there has to be an agreed methodology and standard. Another important agenda is to have a proper agreement between international partners, developers and local communities; and through forums such as United Nations Framework Convention on Climate Change, that is where those decisions are made on how best the countries can be assisted,” she said.

The establishment of carbon markets regulations in 2022 reflects CCDA's engagement with international bodies and obligations to the UNFCCC. These regulations cover various market types, including voluntary and compliance markets, providing avenues for economic growth and sustainability.

There are broadly two types of carbon markets: compliance and voluntary. Compliance markets are created out of any national, regional and international policy or regulatory requirement.

Voluntary carbon markets – national and international – refer to the issuance, buying and selling of carbon credits, on a voluntary basis. The voluntary market is where PNG benefits are mostly seen from carbon trading. 

PNG government and regulators are beginning to explore initiatives such as Green Bonds to generate revenue and strengthen governance systems for effective implementation.

Collaboration with financial institutions such as Bank of PNG, Mama Bank, and MiBank for launching of the Green Finance Center are avenues that government regulators are looking at to bring in needed finance and efforts to leverage financial resources for sustainable development.

Ms Sungi also stated the importance of inclusive discussions in international forums to address country-specific challenges and identify opportunities for collaboration. The recent Glasgow Climate Pact aims to catalyze global climate action, empowering nations like PNG to implement carbon market mechanisms domestically.

“PNG Government through CCDA has policies being developed in time to accommodate for those changes that are taking place even internationally.”

“After Glasgow we have provisions that allow us and gives the authorization back to each party to implement the process of carbon markets into domestic laws that will than govern PNG to manage carbon markets within the country,” she added.

One of the key outcomes of the COP26 climate summit in Glasgow was the approval of Article 6 – the Paris Agreement’s rulebook governing carbon markets. The Paris agreement rule book was passed 2015 to 2021 Glasgow.

Answering that PNG was one of the very few countries to enact a climate change bill. This gave CCDA an argumentative stand in the Paris Agreement by which CCDA managed to have article 5 as a standalone under the Paris Agreement.

It reads: “Sinks and reservoirs (Art.5) –The Paris Agreement also encourages Parties to conserve and enhance, as appropriate, sinks and reservoirs of (greenhouse gases) GHGs as referred to in Article 4, paragraph 1(d) of the Convention, including forests.”

Following the approval of Article 6 in the Paris Agreement's rulebook, CCDA focuses on ensuring PNG communities benefit from forest conservation activities.

Despite potential challenges like double-counting of emissions and human rights abuses, addressing these issues is crucial for the success of carbon trading initiatives and the achievement of global climate goals.

Sungi said: “I am proud to say these regulations have been designed and developed by nationals through our office of the state solicitor. They have been designing these laws with the technical team from CCDA and support from academics, development partner and project partners.” 

CCDA enacted the Paris Agreement Implementation Bill for PNG in 2016. They also did another round of amendments to ensure regulations properly capture the provisions of the Paris Agreement in 2021. The regulators are looking to implement those regulations to impact areas by this year, 2024.

As PNG moves forward with carbon trading regulations, it remains dedicated to harnessing the potential of carbon markets for economic prosperity and environmental resilience.

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