(The following information is based on an unofficial translation of the Decree on Carbon Credits)
Decree on Carbon Credits
The Decree aims to establish principles, regulations, and measures for managing and monitoring carbon credit operations to ensure effectiveness, mobilize international financing, and generate benefits for the state, individuals, legal entities, and organizations.
Scope of Application:
The Decree applies to all domestic and international individuals, legal entities, and organizations involved in carbon credit operations within the Lao PDR.
Governance Structure:
The Ministry of Agriculture and Environment, along with ministries responsible for overseeing carbon credit activities, shall manage and inspect carbon credit operations in coordination with other relevant ministries, organizations, local government agencies, and stakeholders.
The bodies responsible for managing and inspecting carbon credit operations include:
1. Ministry of Agriculture and Environment: Responsible for managing and inspecting carbon credit operations; developing and implementing policies, laws, strategies, and regulations related to carbon credits; authorizing permits, project registration certificates, and business licenses; and has the authority to suspend or revoke these. It is also responsible for registering carbon credit trading transactions, collecting data, managing information systems, and regularly reporting to the government on the implementation of carbon credit operations.
2. Provincial Departments of Agriculture and Environment: Responsible for implementing, promoting, monitoring, and inspecting carbon credit operations; data collection and management of carbon credit information systems; and resolving submissions from stakeholders. They also need to coordinate with various provincial and district entities and regularly report on their activities to the Ministry of Agriculture and Environment and provincial administrative committees.
3. District Offices of Agriculture and Environment: Responsible for implementing, promoting, monitoring, and inspecting carbon credit operations; data collection and management of carbon credit information systems; and resolving submissions from individuals and organizations concerning carbon credit operations. They also need to coordinate with relevant district offices, organizations, sub-district administrative committees, and other stakeholders, and regularly report on their activities to the Provincial Departments of Agriculture and Environment and district administrative committees.
4. Sub-district Administrative Committees: Responsible for implementing, promoting, monitoring, and inspecting carbon credit operations; data collection for carbon credit information systems; resolving submissions from individuals and organizations regarding these operations; and coordinating with villages and other stakeholders. They are also responsible for regularly reporting on the implementation of carbon credit operations to the District Office of Agriculture and Environment and the district administrative committees.
Carbon Credit Activities:
The following carbon credit activities are mandated to comply with applicable carbon standards:
1. Activities in the agriculture and forestry sectors;
2. Activities in the energy production and energy conservation sectors;
3. Activities in the industrial sector;
4. Activities in the infrastructure development, transport, and waste management sectors;
5. Activities in the wetland and peatland conservation sector;
6. Activities in other related sectors.
Implementation of Carbon Credit Projects:
a. Application for Approval of Carbon Credit Projects:
To undertake a carbon credit project for trading, entities must first register their enterprise or notify the industry and commerce sector of new activities to be added to their existing registration. They also need to obtain a case-by-case approval from the ministry responsible for overseeing carbon credit activities. For carbon credit projects that involve bilateral or multilateral cooperation, project implementation requires adherence to the terms of the cooperation agreement and government approval.
b. Requirements for Approval of Carbon Credit Projects:
1. Details on the activity's GHG reduction, sequestration, or storage.
2. The exact location, territory, and area of the GHG mitigation activity.
3. The chosen carbon standard (e.g., Verra, Gold Standard, ART-TREES).
4. Identification of all participants at the project site, including individuals, legal entities, organizations, local communities, and the project owner.
5. An estimate of the projected volume of GHG emissions reduction, sequestration, or storage.
6. Information on ownership or land use rights within the project area, including documentation of land leases, concessions, or permits, and certified records of local residents' consent and participation.
7. An Environmental Impact Assessment (EIA).
8. Details of how benefits will be shared among the state, individuals, legal entities, and organizations involved.
9. Clearly defined objectives for the carbon credit trading mechanism, whether voluntary or compliance-based.
c. Documents Required for Approval of Carbon Credit Projects:
1. Application in the specified format;
2. Economic and technical analysis;
3. Copy of the enterprise registration certificate;
4. Business background or history, if applicable;
5. Certificate of the company's financial position or status;
6. Documents related to land location, asset ownership, or land use rights within the project area, including lease or concession agreements;
7. Any other documents deemed necessary and relevant.
d. Consideration for Approval of Carbon Credit Projects:
The ministries responsible for carbon credit activities shall consider applications for approval of carbon credit projects according to the following procedures:
1. Review the application along with supporting documents for project approval. If any documents are found to be incorrect or incomplete, the applicant shall be notified in writing, including the reason, within five working days from the date of receipt.
2. Coordinate with relevant ministries, organizations, and local government agencies to inspect the project site, conduct consultation meetings, and issue a project approval decision within twenty-five days from the date of receiving a complete and correct application. Upon receiving project approval, the project owner must apply for registration with the Ministry of Agriculture and Environment within sixty days from the date of receiving the approval.
e. Documents Required for Registration of Carbon Credit Projects:
1. Registration application in the specified format;
2. Copy of the carbon credit project approval;
3. Copy of the enterprise registration certificate;
4. Copy of the economic and technical analysis report;
5. Documents verifying the location, boundaries, and project area, including any lease
or land concession agreements, if applicable;
6. Environmental compliance certificate(s), if applicable;
7. Any other documents deemed necessary and relevant.
f. Consideration for Registration of Carbon Credit Projects:
The Ministry of Agriculture and Environment shall process carbon credit project registration applications as follows:
1. Receive and review the application and supporting documents for project registration. If any documents are found to be incorrect or incomplete, the applicant shall be notified in writing, including the reason, within five working days from the date of receipt.
2. Coordinate with the ministries responsible for overseeing carbon credit activities, relevant organisations, and local government agencies to inspect the project site, conduct consultation meetings, and issue a project registration certificate within thirty days from the date of receiving a complete and correct application and supporting documents.
International Cooperation and Trading:
- The Lao PDR Government may cooperate with foreign entities for GHG mitigation activities and carbon credit trading.
- A minimum of 10% of total carbon credits from such cooperation is retained by the Lao PDR.
Carbon credit trading involves agreements between entities for offsetting emissions or resale. Trading must occur through a commercial banking systems or the Bank of Lao PDR, with cross-border financial transfers complying with regulations.
- Types of trading include compliance-based and voluntary.
- Requirements for trading include project registration, certification by an independent entity, approval of quantified GHG amounts, trading approval, and clear benefit-sharing agreements.
Technical Inspections of Carbon Credit Projects:
Technical inspection refers to the process of monitoring and evaluating the implementation of carbon credit projects, including compliance with project requirements, benefit-sharing arrangements, and fulfilment of other obligations. Technical inspections of carbon credit projects consist of:
1. Technical inspection conducted by the project owner;
2. Technical inspection conducted by the agriculture and environment sector;
3. Technical inspection conducted by the sector responsible for overseeing the respective carbon credit activities.
Suspension, Revocation, Modifications and Termination of Activities:
- Suspension: Carbon credit projects may be suspended for violations of regulations without severe environmental impact, non-compliance with technical or financial obligations, suspension of the environmental compliance certificate, misrepresentation of information, or failure to address issues identified during inspections. Suspensions include a defined period for corrective action.
- Revocation: It occurs if issues under suspension are not corrected, if activities fail to begin within two years of approval, or if violations cause serious environmental harm. Once revoked, the Ministry of Agriculture and Environment will instruct the relevant authority to terminate the project’s activities.
- Modifications: Any material changes—such as adding or removing GHG reduction activities, shareholder changes, or other adjustments—must be submitted to the Ministry of Agriculture and Environment for review.
- Termination: Projects may be terminated if requested by the owner and approved by the Ministry, upon reaching their defined duration, or by final court or government decision.
Rights and Obligations of Project Owners:
Project owners have rights to carbon credit ownership, assignment, transfer, sale, and use as collateral. They are entitled to investment promotion incentives and information. Obligations include protecting natural resources, maintaining technical data, preventing negative environmental impacts, complying with agreements, paying taxes/fees, and reporting regularly.
