Paraguay wants to make big money from the global carbon market.
The South American country’s first ever carbon forum gathered government officials, project developers, financiers, and international experts over two days at the end of March. The message was clear: A big financial opportunity is developing, and Paraguay plans to make the most of it.
Paraguay’s president, Santiago Peña, addressed the congregation at the beginning of the event, stating that the government’s aims include “mobilizing investment, strengthening competitiveness, and transforming our natural capital into concrete development opportunities for all of Paraguay.”
The country moved quickly to develop a legal framework for carbon credit projects aligned with Article 6 of the landmark climate treaty the Paris Agreement, which lays out standard operations countries can use to buy carbon credits from other countries to meet their emissions reduction obligations, opening the door to a potential source of climate adaptation funding for developing nations. Paraguay’s framework will allow the sale of carbon credits on a strictly regulated market to countries that need help reaching their emissions reduction obligations.
“Let’s be clear. This isn’t just idealism,” said Rolando De Barros Barreto Acha, Paraguay’s environment and sustainable development minister. “We are talking about a business opportunity that will benefit all sectors of our society.”
The state of the market
The voluntary carbon market faces a lot of criticism. Some carbon credit projects have fallen short on integrity and key considerations like permanence and additionality. Projects that reduce carbon emissions on the voluntary market, like reforestation or conservation efforts, calculate and independently verify emissions reductions before selling them as credits at roughly US$5 to $10 per tonne of avoided emissions, or emissions that would be released if the the project did not exist.
On the other hand, compliance carbon markets, like cap-and-invest or cap-and-trade programs, legally require countries or private entities to offset emissions they are unable to reduce. Given the added scrutiny — and therefore higher integrity — of carbon credits sold through compliance markets, these credits can demand much higher prices, up to around US$40 per tonne of avoided emissions.
Paraguay is developing its carbon credit network for these compliance markets.
“It’s not about which country can sell the most credits, it’s about who can sell better credits at higher prices,” said Victor Gonzalez, director of carbon markets at Paraguay’s Ministry of the Environment and Sustainable Development.
Paraguay’s plan
Paraguay is confident it has the tools to become a regional hub for carbon credit projects. One of the country’s glowing advantages is that its electricity supply is 100 percent renewable. Its electricity is primarily produced by hydroelectric dams, mainly the Itaipu Dam shared with Brazil on the eastern border.
Clean energy opens the door for Paraguay to generate carbon credits from sectors beyond forestry and land use. Electrifying industrial processes and transportation can cut emissions, and other innovations like green hydrogen could further drive the country’s sustainable development ambitions, all of which are opportunities that the country is exploring.
Other carbon markets in Latin America are already much more advanced than Paraguay’s — namely Brazil, Colombia, and Peru, which together account for over 70 percent of the region’s voluntary carbon market. But Paraguay and international experts see that as an advantage, rather than a setback.
Director of Carbon Markets Gonzalez spoke about the benefits of starting from a clean slate and the freedom it provides when developing legal frameworks. In comparison, countries like Brazil or Mexico have different subnational carbon regulations, which can make building a national framework very complicated.
“Having a clean slate is an advantage for Paraguay,” Michael Berends, CEO of the global carbon market advisory firm ClearBlue Markets, told TriplePundit. “But it’s important to move fast now to be part of the few countries that have signed deals with buying nations under Article 6.”
Paraguay signed an agreement with Singapore to collaborate on carbon credit projects under Article 6 in May 2025 and has Article 6 memorandums of understanding signed with the United Arab Emirates and Taiwan. New Zealand, Norway and Sweden are also exploring carbon credit agreements with Paraguay under Article 6.
One of the elements that allows Paraguay to move quickly is that much of the land in the country is privately owned, making it easier for project developers to make deals involving land use. Though, conflicts over inequality in land distribution are prevalent in Paraguay.
“We are seeing that this benefits international investment and capital, but there is no public policy that favors, for example, Indigenous peoples or small and medium-sized producers who could benefit from the opportunities offered by carbon projects,” said Victor Vera, board member of Paraguayan conservation and sustainable development organization OPADES.
Though Paraguayan NGOs have concerns about who will benefit from this emerging carbon market, members of the government and the private sector both spoke about including local communities in project development and providing all Paraguayans with the tools to access carbon markets.
“Let’s be honest — this is a market that is 100 percent reputational. It’s not about being sanctioned or punished, this is about reputation,” said Gonzalez of Paraguay’s Ministry of the Environment and Sustainable Development.
Featured image credit: 總統府/Wikimedia Commons
