Paraguay Law Could Deliver Millions of Credits to Paris Agreement Market

February 19, 2025

Paraguay Law Could Deliver Millions of Credits to Paris Agreement Market

Paraguayan President Santiago Peña signed a law on Tuesday that will bring all carbon projects in the country under one registry and manage their interplay between voluntary and Paris Agreement markets.

Law No. 7190/23 “On Carbon Credits” was passed by the Paraguayan legislature in 2023, and following its signing by Peña, will take effect within 180 days, according to its text.

All projects operating in Paraguay will need to record their activity with a national registry that will be established by the country’s Ministry of Environment and Sustainable Development (MADES), according to the law. The registry will also oversee the country’s participation in the Paris Agreement and prevent the double-counting of credits for voluntary retirements and nationally determined contributions of the UN climate accord.

The law “will allow the country to advance in bilateral negotiations with Singapore, the United Arab Emirates (UAE), Switzerland, Taiwan and Finland, negotiations that are already underway,” MADES said in a Tuesday news release.

Projects that sell their credits to the voluntary market will need to contribute between 3% and 10% of issuances to Paraguay to advance its own NDC.

Violations of the law could incur penalties of temporary or permanent disqualification from the Paraguayan national registry and fines, according to the text.

The law stipulates that carbon projects operating in Paraguay will have one year to register with the new system.

“This is a great opportunity, since the voluntary market is currently paying between $3 and $15 per ton of sequestered carbon, and the regulated market between $40 and $70,” Minister of Industry and Commerce Javier Giménez said in the news release. “Given the type of carbon sequestration projects that Paraguay offers in its forestry sector, this could become an export market of between $300 and $500 million per year.”

The prices Giménez quoted roughly matched OPIS price assessments for nature-based reduction projects. OPIS on Tuesday assessed its REDD+ V20 Tier 3 range at 50cts/metric ton to $13/mt and its REDD+ V22 Tier 3 range at $5.50/mt to $15.50/mt. But nature-based removal credits from afforestation,
reforestation and revegetation projects trade at a premium and can command forward prices of $50/mt or higher, as OPIS has previously reported.

REDD+ stands for reducing emissions from deforestation and forest degradation.

Paraguay’s carbon credit law could draw a significant volume of nature-based credits from the voluntary market into the Paris Agreement system. Three REDD+ and seven ARR projects in the country are currently registered with Verra, registry records show. Three more REDD+, three more ARR and two agricultural land management projects are in Verra’s development pipeline. Together, these have estimated annual issuances of over 8.9 million credits.

Two ARR projects registered with Gold Standard are also underway.

“Paraguay is a country with strategic resources and immense potential. With this regulation, we ensure that these resources translate into real opportunities for Paraguayans, in employment, investment and sustainable growth,” Peña said in the MADES news release.

MADES did not immediately respond to a request for comment.

Reporting by Henry Kronk, hkronk@opisnet.com
Editing by Jeremy Rakes, jrakes@opisnet.com