Kathmandu - Nepal has reached a significant milestone in its climate action journey with the issuance of the Carbon Trade Regulation by the Ministry of Forests and Environment (MoFE), formally paving the way for the operationalization of the country’s carbon market framework. The move marks a strategic shift toward using carbon trading as an innovative and sustainable source of climate finance.
The new regulation provides the long-awaited legal and institutional foundation needed to participate in national and international carbon markets. It is expected to enable Nepal to monetize emission reductions and carbon sequestration efforts, particularly in sectors such as forests, renewable energy, clean cooking, and climate-smart agriculture, while ensuring environmental integrity and transparency.
The United Nations Development Programme (UNDP) Nepal has played a key supporting role in this process, working closely with the Government of Nepal from the early stages of policy formulation to regulatory design. UNDP’s support has also extended to the development of the National Carbon Registry, a critical mechanism for tracking carbon credits, avoiding double counting, and building trust among investors and international partners.
In addition, efforts have been made to strengthen institutional readiness and build the capacity of both public and private stakeholders so that Nepal’s carbon market can function effectively and equitably. Officials and experts involved in the process say these steps are essential to ensure that carbon trading delivers real climate benefits alongside social and economic gains.
Nepal, one of the countries most vulnerable to climate change despite its minimal contribution to global emissions, views carbon markets as a promising tool to mobilize climate finance in support of its low-emission and climate-resilient development goals. The regulation is expected to enhance access to international climate finance while encouraging domestic investment in green projects.
The issuance of the Carbon Trade Regulation is widely seen as a foundational achievement that positions Nepal to engage more confidently in global carbon markets, while aligning climate action with national development priorities. For policymakers and development partners alike, it represents a crucial step toward turning climate ambition into tangible impact.
