Case Study

Putting Papua New Guinea on the international Carbon Market Map

Papua New Guinea

Overview

We supported the Government of Papua New Guinea to chart a course for the country’s participation in international carbon markets. Our work combined a detailed analysis of sectoral mitigation potential with a thorough review of the nation’s draft carbon market regulation — identifying opportunities to strengthen alignment with the Paris Agreement and recommending targeted revisions to the regulatory framework. Building on these foundations, we also developed a roadmap to guide the government in establishing the necessary building blocks for successful carbon market participation.

The Story

Assist the government in establishing a pathway for Article 6 participation

Papua New Guinea (PNG) is emerging as one of the most interesting Pacific Island nations for participation in international carbon markets. With abundant forest and energy resources, and a strong history of involvement in REDD+ initiatives, the country views carbon markets as a key avenue to unlock climate finance and accelerate its transition toward low-carbon development.

To guide this process, the World Bank, in collaboration with PNG’s Climate Change and Development Authority (CCDA), commissioned a Scoping Study and Roadmap to assess PNG’s readiness for participation in international carbon markets and to identify the steps needed to strengthen its enabling environment. The study evaluated the country’s institutional, regulatory, and sectoral readiness under Article 6 of the Paris Agreement, as well as its potential in the Voluntary Carbon Market (VCM).

Identify sectoral opportunities for carbon market engagement

The study highlighted forestry and energy as the two most promising sectors for carbon market participation.

FOLU sector

In the forestry and land-use sector, PNG’s vast forest cover and prior engagement with the UNFCCC’s REDD+ program provide a strong foundation for scaling up mitigation activities. However, the sector faces challenges, including unclear land tenure systems, inconsistent benefit-sharing arrangements, and limited community engagement in past projects. The roadmap recommends transitioning from project-level REDD+ initiatives to jurisdictional or national-scale programs to improve environmental integrity, avoid double-counting, and enhance transparency.

Energy sector

In the energy sector, the government’s NDC target of achieving 78% renewable energy by 2030 presents major opportunities for carbon finance. Solar and hydropower have the potential to replace fossil-based generation, while decarbonizing mining and industrial operations—which rely heavily on captive diesel and gas power—could yield high emission reductions. The roadmap recommends prioritizing renewable energy expansion, efficiency improvements, and electrification of transport under both Article 6 and voluntary market pathways.

Assess carbon market readiness

The readiness assessment provided a comprehensive overview of PNG’s capacity to engage effectively in international carbon markets, focusing on both institutional and technical dimensions. Using the Mitigation Action Assessment Protocol for International Transfer Readiness (MAAP-ITR), the team analyzed:

  • policy coordination, 
  • institutional mandates, 
  • activity cycles, 
  • and reporting systems relevant to Article 6.

Overall, the assessment revealed that PNG has made significant progress in establishing climate governance structures through the Climate Change (Management) Act (CCMA) 2015 and subsequent amendments. The creation of the CCDA as the national coordinating authority provides a solid institutional base for market participation. However, the analysis also identified gaps in defining specific responsibilities for authorization, corresponding adjustments, and registry management—all critical components for Article 6 participation.

Recommendations included defining the processes for issuing authorizations and approvals, enhancing coordination among ministries, and integrating data systems to improve monitoring, reporting, and verification (MRV).

Develop a roadmap for market participation

The Roadmap for Carbon Market Readiness outlined a phased approach to help PNG operationalize its participation in carbon markets. The short-term priorities focused on consolidating the governance framework, finalizing the Climate Change (Management) (Carbon Markets) Regulation (which was later published in December 2025), and developing a national carbon market strategy. These activities aim to provide clarity on institutional responsibilities, project approval processes, and authorization procedures for internationally transferred mitigation outcomes (ITMOs).

Medium-term actions were directed toward integrating carbon market mechanisms into broader climate policy. These included quantifying sectoral targets, developing NDC implementation roadmaps, and establishing a long-term low-emission development strategy (LT-LEDS) to enhance ambition over time.

The roadmap also proposed a capacity-building program for national stakeholders, with a focus on ensuring environmental integrity, benefit-sharing, and social safeguards in line with international best practices.

Review and strengthen the regulatory framework

A key component of the study was the review of PNG’s legislative and regulatory framework, including the CCMA 2015 and the draft CMR 2024 (published 2025). Together, these instruments define the institutional responsibilities and procedures governing carbon markets.

The analysis found that the CMR 2024 provided a strong starting point, introducing procedures for permit issuance, project registration, benefit sharing, and reporting. However, several provisions required clarification to ensure full compliance with Article 6 rules and international integrity standards as well as providing clarity for private sector participants.

Recommendations included:

  • Specifying which authority is responsible for issuing authorizations, performing corresponding adjustments, and maintaining the national registry.
  • Defining how PNG’s national “Register” will interface with international registries and voluntary carbon market standards.
  • Integrating provisions to prevent double-counting through transparent tracking and consistent accounting; and
  • Providing guidance on how nested REDD+ activities will align with national accounting frameworks.

The government has already taken steps to address these issues through the drafting of Guidelines for Implementing Article 6.4 Projects. These guidelines aim to build awareness among domestic stakeholders and international developers while ensuring consistency with UNFCCC decisions and sustainable development principles.

Drivers of change

Position PNG as a regional leader in carbon market readiness

Through this scoping study and roadmap, Papua New Guinea now possesses a comprehensive understanding of its readiness to participate in international carbon markets and a clear action plan for moving forward. By implementing the recommendations of the CMR 2024 and integrating robust environmental and social safeguards, PNG can position itself as a regional leader in carbon market governance.

Lessons Learned

Time zone differences are a challenge working with a team of experts spread across the globe while only being able to do limited in-country missions. Greater presence in the country could have contributed to more direct dialogue with the Government and picking up on Papua New Guinea’s unique challenges early on. An example of this would be factoring in the important history of PNG’s participation in voluntary carbon market projects and the particular challenges and concerns raised from that experience.

Additional project information

Client: Papua New Guinea and the World Bank

Year: 2024-2025

In-country mission was held on March 2025, presenting the full results of the project.