March 4, 2025
THIMPHU – The Ministry of Energy and Natural Resources (MoENR) on February 28 announced a positive list of project proposals eligible for carbon trading, including initiatives in renewable energy, green infrastructure, low-carbon transport, afforestation, reforestation, and restoration, among others.
These projects align with the country’s strategy to reduce greenhouse gas emissions and advance climate goals under the Paris Agreement.
The announcement coincided with the signing of a landmark implementation agreement between Bhutan and Singapore under Article 6.2 of the Paris Agreement.
Article 6.2 allows countries to trade Internationally Transferred Mitigation Outcomes (ITMOs) to meet their Nationally Determined Contributions while maintaining rigorous accounting to avoid double counting.
The signing ceremony in Singapore was attended by senior officials from both nations, led by Minister of Energy and Natural Resources, Gem Tshering, and Singapore’s Minister for Sustainability and the Environment, Grace Fu Hai Yien.
This milestone agreement strengthens bilateral collaboration under Article 6.2 of the Paris Agreement, facilitating Bhutan’s participation in international carbon markets.
Singapore is emerging as a global hub for carbon trading, and this partnership will enable both countries to develop projects with sustainable development benefits and support environmental ambition through mitigation, according to MoENR’s press release.
Minister Grace Fu Hai Yien during the signing said that Singapore is pleased to partner with Bhutan, a carbon-negative country and a leader in environmental stewardship, to accelerate climate action through this Implementation Agreement. “By working together on high-integrity carbon markets, we can drive sustainable growth, mobilise climate finance, and reduce global carbon levels. This collaboration strengthens our shared vision for a greener and more sustainable future and accelerates the global green transition.”
The positive list of eligible carbon market projects under Article 6 includes renewable and energy-efficient technologies such as improved cookstoves, thermal and electrical efficiency in buildings, and industrial process improvements.
Green infrastructure and integrated waste management projects, including waste-to-energy, material recovery, sanitary landfills, and wastewater treatment, are also prioritised.
Low-carbon transport, alternative fuels like biofuels and green hydrogen, and sustainable agriculture contribute to emissions reduction are also among the positive list projects.
Additionally, afforestation, reforestation, wetland and rangeland restoration, and livestock management initiatives playing a crucial role in mitigating greenhouse gas emissions are also among the positive list projects.
While Bhutan’s forests naturally absorb significant amounts of carbon dioxide, only certified projects that meet international standards—such as reforestation and renewable energy initiatives—can generate tradeable carbon credits. Projects must demonstrate “additionality,” proving that emissions reductions would not occur without them.
Registering forest-related initiatives such as reforestation or afforestation projects is essential for selling forest sequestration as carbon credits. Once approved, Bhutan can trade these credits under the mechanisms outlined in Article 6.
The positive list was developed through a consultative process with guidance from the Climate Change Coordination Committee and was endorsed during the Second Meeting of the National Environment Commission on February 6, 2025.
The development of Article 6 carbon projects will be governed by the forthcoming Bhutan Carbon Market Policy 2025, ensuring alignment with national priorities, environmental integrity, and Article 6 guidelines, the press release states. The list will be periodically reviewed and revised to incorporate emerging developments.
Following the signing of the Singapore-Bhutan Implementation Agreement for carbon collaboration, the Bhutan Climate Fund Roundtable Forum was held in Singapore by MoENR, in partnership with the Government of Singapore and the World Bank.
The event brought together over 31 investors, project developers, and climate finance experts from 21 organisations to explore opportunities for developing carbon projects, mobilising carbon finance, and scaling Bhutan’s climate ambition.
The Bhutan Climate Fund is an innovative financing mechanism designed to channel carbon finance into high-integrity climate projects in Bhutan. It serves as an intermediary for carbon transactions, aggregating financial resources and carbon credits to establish a structured and transparent carbon market.
With Bhutan’s transition from a Least Developed Country and the decline in traditional donor finance, the BCF ensures sustained environmental commitments while promoting economic resilience. The fund aims to mobilise USD 50 million in its first year, attracting public and private investors to position Bhutan as a model for climate finance innovation, the press release states.
“Bhutan aims to demonstrate that carbon markets can be a powerful tool for both climate action and sustainable development,” Lyonpo Gem Tshering said. “The success of the Bhutan Climate Fund depends on collaboration, and we invite partners to join us in shaping this initiative for lasting impact.”