Case Study

Assessing Somalia’s readiness and opportunities for participation in international carbon markets.

Somalia

Overview

The Government of Somalia sought to understand its capacity and potential for participating in international carbon markets, particularly under Article 6 of the Paris Agreement. A comprehensive scoping study assessed the country’s readiness and identified practical approaches to build preparedness for engagement in international carbon markets.

The Story

Supporting the government in identifying pathways for market participation

Somalia has taken early steps toward engaging in international carbon markets as part of its broader climate ambition. In its updated Nationally Determined Contribution (NDC 2025), the country set a target to reduce emissions by 34% by 2035 compared to a business-as-usual scenario of 85 MtCO₂e. While Somalia remains one of the world’s least developed and most climate-vulnerable nations, its government is increasingly exploring how carbon markets could provide new finance for mitigation actions and green development.

To guide this effort, the Somali Development and Reconstruction Bank (SDRB) supported Somalia through a readiness assessment to evaluate the institutional, policy, and sectoral conditions required to participate in international carbon markets under Article 6 of the Paris Agreement and the Voluntary Carbon Market (VCM). A roadmap to guide preparations for participation was also developed.

Assessing the country’s readiness for market participation

The study applied the Mitigation Action Assessment Protocol for International Transfer Readiness (MAAP-ITR) to examine Somalia’s readiness across four key areas—climate strategy, institutionalization, policy framework, and reporting infrastructure.

The findings highlight that Somalia has clear climate targets but limited institutional and technical readiness for carbon market participation. The country scored high in defining mitigation activities and quantified NDC sectoral targets but scored low in planning, accounting, and reporting. Somalia has yet to develop a long-term low-emission strategy or assign responsibilities for carbon market participation.

Institutionally, Somalia’s readiness remains at an early stage. Roles and authorities for UNFCCC reporting, Article 6 participation, and carbon market oversight are not yet defined. Reporting infrastructure, MRV systems, and registry solutions were also yet to be developed, further constrains its ability to operationalize carbon market engagement.

Identifying sectoral opportunities for carbon credit generation

The assessment identified agriculture, land use, and energy as the most promising sectors for developing carbon market projects. Using a “traffic light” framework to evaluate MRV feasibility, data consistency, and market attractiveness, the analysis found that:

  • Agriculture projects—such as solar-powered irrigation and soil carbon enhancement—are highly feasible and directly linked to Somalia’s rural livelihoods.
  • LULUCF (land use, land-use change, and forestry) activities, including agroforestry and drought-tolerant tree planting, could provide large-scale mitigation potential but require strong safeguards and land tenure clarity.
  • Energy projects focused on solar, mini-grids, and efficient cookstoves offer relatively low-cost emission reductions and align with Somalia’s energy access goals.

These findings provide an early indication of where international finance and technical partnerships could be directed to deliver high-integrity mitigation outcomes.

Reviewing the existing regulatory and policy framework

Somalia’s legal framework for climate governance is still in its formative stages. The country has adopted a National Climate Change Policy (2023) and a Strategic Plan for Environment and Climate Change (2023–2028), which outline mitigation and adaptation priorities. However, there are currently no laws or regulations dedicated to carbon market participation.

The assessment noted that while institutional frameworks exist at the policy level, the country has not yet established a Designated National Authority (DNA) or clear rules for authorization, approval, and reporting of carbon market activities. Future reforms will need to define the processes for approving mitigation projects, authorizing ITMOs (internationally transferred mitigation outcomes), and ensuring alignment with Somalia’s NDC commitments.

Developing a roadmap for building market readiness

The roadmap provided a set of short- and medium-term actions to strengthen Somalia’s readiness for market participation.

Short-term priorities include:

  • Developing a governance and institutional framework for carbon markets.
  • Assigning responsibilities for oversight and operational functions.
  • Establishing a DNA and defining authorization procedures.
  • Establishing a registry and MRV system; and
  • Drafting carbon market regulation and operational manual.

Medium-term priorities involve developing a long-term strategy and low-emission development pathway, quantifying NDC targets, and preparing for future cooperative approaches under Article 6. These steps will enable Somalia to gradually transition from readiness to implementation while ensuring transparency and integrity.

Drivers of change

Laying the foundation for future participation in international markets

Through this assessment, Somalia has gained a clear understanding of its strengths, gaps, and the next steps required for carbon market readiness. By developing a national strategy, establishing institutional frameworks, and strengthening its MRV systems, the country can build credibility and attract international partners.

Lessons Learned

The Somalia project was challenging due to limited data availability and documentation. Many relevant policy documents either did not exist or were inaccessible. The work therefore relied heavily on international benchmarks, general national policies, and expert judgment to fill information gaps.

Another lesson was shaped by the request for a high level of detail in the roadmap and sectoral analysis, requiring the team to tailor its work to provide practical, context-specific recommendations while maintaining methodological rigor.

Knowledge Sharing

Workshops were held twice for this project on April and August 2025, focusing on capacity-building session of Article 6 of the Paris Agreement and elaboration of detailed roadmap as a result of the carbon market assessment.

Additional project information

Client: Somalia and the Somali Development and Reconstruction Bank (SDRB)

Year: 2025