The Climate Change (Management) (Carbon Markets) Regulation 2025 of Papua New Guinea establishes a legal framework for administering carbon markets, identifying carbon rights, and regulating mitigation activities.
Governance
Permit Review Committee: The regulation establishes a Permit Review Committee of officials from the Climate Change and Development Authority (CCDA) to assess permit applications, monitor mitigation activities, and advise the Managing Director.
Note- 'Permit' here refers to Sustainable Development Mechanism (SDM) permit or a Voluntary Carbon Market (VCM) permit, which allows a person to conduct mitigation activities that contribute to the mitigation of GHG emissions and support sustainable development in accordance with Article 6 of the Paris Agreement.
Register
1. The regulation mandates a central register to track permits, carbon rights, FPIC documentation, and the generation and sale of carbon credits.
2. It also requires compliance with Environmental Integrity Principles to avoid double counting and ensure additionality.
Carbon Rights
Primary Carbon Rights: Primary rights are typically held by those with an original, underlying legal interest in the land or technology where the carbon is stored or reduced.
1. A person or group with customary ownership of the land where a mitigation activity takes place is considered a primary carbon rights holder.
2. Individuals or entities granted legal rights over land and specific technology (used in the mitigation activity) by other laws (such as leases or state grants) also possess primary carbon rights.
Note- Holding a primary right does not automatically allow a person to conduct a mitigation activity; they must still follow the regulatory process for permits.
Secondary Carbon Rights: Secondary rights are "usage and trading" rights granted by the state to a developer or person authorised to manage a carbon project and should compulsorily have a valid permit issued by the authority.
1. This right gives the holder the legal power to conduct mitigation activities, generate carbon credits, and sell or transfer those credits on the market.
2. It grants the holder free and unimpeded access to the project area (land or technology) to carry out the required activities, subject to the law.
3. A critical condition of holding a secondary carbon right is the legal requirement to share the financial benefits with the primary carbon rights holders.
Free, Prior and Informed Consent
Requires project proponents to obtain the collective, uncoerced consent of primary rights holders. This involves at least three consultations and the submission of a "Certificate of Consent" to the Authority.
Mitigation Activities and Trading
Mitigation Activities: Defines three approaches for activities: Project (requiring a VCM or SDM permit), National (coordinated by the Authority for national targets), and International Cooperation (bilateral agreements under the Paris Agreement).
Carbon Trading: Outlines the formula for converting activity data into carbon credits. It requires permit holders to register credits and remit net proceeds into local bank accounts.
Benefits Sharing
The regulations has set principles for fair and transparent distribution of benefits. It requires a Benefit Sharing Plan and Agreement, and mandates that 7% of total revenue from credit sales be paid to the Authority.
