Rwanda on December 2 signed cooperation agreements with Singapore and Kuwait towards the implementation of article 6 of the Paris Agreement that governs the Carbon market.

That was at the launch of Rwanda's Carbon Market Framework, during the 2023 UN Climate Change Conference – COP28, in Dubai, UAE, according to Rwanda Environment Management Authority (REMA).

ALSO READ: Rwanda’s carbon market framework launch, more events at COP28

Carbon markets are trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions, according to the United Nations Development Programme (UNDP).

One tradable carbon credit equals one tonne of carbon dioxide (CO2), or the equivalent amount of a different greenhouse gas reduced, sequestered (absorbed), or avoided. When a credit is used to reduce, sequester, or avoid emissions, it becomes an offset and is no longer tradable.

Article 6 of the Paris Agreement allows countries to voluntarily cooperate with each other to achieve emission reduction targets set out in their NDCs. This means that, under Article 6, a country (or countries) will be able to transfer carbon credits earned from the reduction of greenhouse gases (GHG) emissions to support one or more countries meet climate targets. The article creates the basis for trading in GHG emission reductions (or "mitigation outcomes”) across countries.

As per REMA, carbon trading is among innovative climate finance solutions that will help Rwanda to deliver on its target to reduce emissions by 38 per cent by 2030.

While officiating at the launch of the Framework, the Minister of Environment, Jeanne d’Arc Mujawamariya, said that it is a crucial move to advance climate action and facilitate Rwanda’s participation and maximise carbon market opportunities.

Rwanda's Carbon Market Framework was commissioned by Rwanda Environment Management Authority (REMA), with support from the United Nations Development Programme (UNDP) in Rwanda.

Its establishment demonstrates Rwanda’s commitment to achieve emission reduction targets set out in Rwanda's updated nationally determined contribution (NDC) – a climate action plan to cut emissions and adapt to climate impact.

ALSO READ: Inside Rwanda&039;s ‘carbon market scheme’

According to REMA, the framework will help in bringing confidence to the market and reduce uncertainty for project participants, particularly for the private sector.

It establishes a governance and institutional structure that will make it possible for Rwanda to make further considerations regarding its participation in carbon markets.

In addition, the framework provides an operationalisation of operational/technical elements, such as determining specific procedures necessary to participate, including but not limited to, the project cycle, requirements to ensure environmental integrity, and processes for reporting.

REMA Director General Juliet Kabera said "the framework will ensure that every credit bought in Rwanda will be done in a way that is transparent, verified and meets the requirements of the international carbon market,” according to a press release issued by the Ministry of Environment.

Rwanda developed adequate domestic carbon crediting guidelines, including institutional, legal and governance structures and robust national carbon market registry to avoid double counting of GHG emissions.

In Rwanda’s updated NDC, Kabera pointed out, the government commits itself to reduce greenhouse gas emissions by 38 per cent through unconditional and conditional measures in agriculture, energy, waste, and industrial processes and product use; and will drive adaptation across eight sectors: water, agriculture, and forestry, human settlement, health, transport, mining, and cross-sectional.

To deliver on these goals, the government has pledged to raise $11 billion ($5.7 billion for mitigation and $5.3 billion for adaptation measures) for full implementation of the NDC (by 2030).

Kabera said that the government is committed to mobilising domestic financial resources of around $4.1 billion while the remaining $6.9 billion is required from the international community.

To achieve its conditional target, Rwanda intends to use different climate finance sources including international carbon market mechanisms and cooperative approaches under Article 6 of the Paris Agreement.