Addis Ababa, Mar 6 – Ethiopia’s Ministry of Planning and Development has drafted a proclamation to formalise its carbon credit market, part of a broader effort to build a regulatory framework for carbon trading following the launch of a five-year national carbon market strategy covering 2025 to 2030.
The legislation is slated for submission to the Council of Ministers in July 2026 for approval, according to Misganaw Eyassu, a senior advisor at the Ministry of Planning and Development.
Eyassu said developing the policy framework has taken time as authorities navigate a relatively new policy area while addressing technical and financial constraints.
“The initiative is new for the country, and there are technical and financial gaps that have to be addressed,” he said on Thursday during the second climate finance summit hosted by FSD Ethiopia.
He said the country also lacks a national carbon registry platform, which is required to record, track and verify carbon credits generated from domestic projects. Work to design and establish the system is still at an early stage.
The planned legislation is intended to provide the legal foundation for the country’s carbon market, including institutional arrangements, regulatory oversight and mechanisms to support participation in international carbon trading systems.
Ethiopia’s National Carbon Market Strategy for 2025–2030 sets out a framework to establish a regulated carbon trading system aligned with the country’s NDC 3.0 targets and the Paris Agreement’s Article 6. The strategy focuses on generating carbon credits, attracting domestic and international climate finance, and directing investment into sectors such as renewable energy, forestry, and land use.
It outlines measures for transparency, monitoring, and benefit-sharing, while defining institutional roles and regulatory structures to support market participation.
The Eastern African country’s climate ambitions have gained global visibility ahead of its hosting of the 32nd United Nations Climate Change Conference (COP32) in Addis Ababa in November 2027. The country secured the hosting rights with the backing of the African Group of Negotiators at COP30 in Belém, Brazil.
The country has submitted its third-generation Nationally Determined Contribution (NDC 3.0), targeting a 70.3 percent reduction in greenhouse gas emissions by 2035 compared with a business-as-usual scenario. The plan relies on an unconditional domestic contribution of 30.7 percent.
The government estimates the total cost of NDC 3.0 implementation at $106.35 billion, including $66.35 billion for mitigation and $40 billion for adaptation.
Between 2021 and 2025, external financiers committed an average of $1.7 billion annually for mitigation and adaptation projects, covering only seven percent of the country’s estimated climate finance needs of $25.3 billion per year, or less than two percent of GDP.
Adaptation projects received a larger share of funding at 56 percent, compared with 38 percent for mitigation.
