PRESIDENCY OF THE REPUBLIC OF PARAGUAY, PGY

This award recognizes Paraguay for its exceptional foresight in establishing Law N° 7190, a pioneering and comprehensive legal framework for carbon credits within the country. This groundbreaking legislation addresses critical aspects of carbon market infrastructure, setting a robust foundation for national and international climate action.

At its core, Law N° 7190 meticulously defines the ownership and titling regime for carbon credits generated by projects in Paraguay, alongside clearly identifying participating parties and mandating the registration of all transactions. This directly fulfills the fundamental need for clear legal parameters governing carbon credit generation and exchange. Crucially, the law establishes the Carbon Credit Registry, managed by the Ministry of Environment and Sustainable Development. This national mechanism is central to formal accounting, explicitly recording data from mitigation projects aiming to generate credits within the voluntary market, and thereby incentivizing broad public and private sector participation.

A significant aspect of Law N° 7190 is its explicit design to safeguard Paraguay's compliance with its Nationally Determined Contributions (NDCs). The Carbon Credit Registry plays a pivotal role by documenting essential information for NDC reporting and enabling the Application Authority to set limits on international carbon credit transfers if NDC compliance is at risk. Furthermore, the law mandates the retention of a percentage (3-10%) of project credits for NDC safeguarding, particularly for international transfers, and allows for the registration of external credits to be counted towards the NDCs, strengthening the bridge between voluntary action and national commitments.

Beyond domestic compliance, the law profoundly promotes transparency and integrity within the carbon market. The registry offers public information on active projects and generated credits, crucially aiming to prevent the double counting of issued credits—an essential pillar for market integrity, especially vital for NDC accounting and potential engagement with international mechanisms like Article 6 of the Paris Agreement. By establishing clear infringements and penalties, the law ensures compliance and the veracity of information. By regulating and making the voluntary carbon market transparent, Law N° 7190 not only attracts vital investment and projects but also indirectly contributes to the national mitigation objectives expressed in the NDC, solidifying Paraguay’s position as a forward-thinking leader in climate governance.