News of carbon trade contracts have flooded the news headlines in Papua New Guinea. The headline portrays carbon trade as a booming and lucrative business.  But, what really is carbon trade?

To put simply, carbon trading is the process of buying and selling of carbon stocks that allows the holder of a certain permit or license to emit up to a tonne of CO2. So if a company’s or a country’s emissions are lower than its allowable one tonne, it can sell its surplus. If it exceeds its limits (more than one tonne), on the other hand, it will have to buy additional share on the market or cut its production.

As the name suggests, the transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed.

Carbon Trading started in 1997 when some 180 countries signed the Kyoto Protocol. The Protocol called for countries to reduce their greenhouse gas emissions between 2008 – 2012 to 5% below 1990 levels, and carbon trade was planned to be used as one of the instruments. Papua New Guinea, as a signatory to the Kyoto Protocol is eligible to participate in Carbon Trading activities.

However, there is public outcry that PNG is not ready to enter the carbon market. Last week civil societies group called on the government to ‘polish its laws and filter its processes’ for forest owning communities to fully benefit from Carbon Trading activities.

The lack of clarity at the political and  legislative causes confusion. Currently there is no clear control of the management, use and trade of carbon offsets. Even though the problem is yet to be sorted by the government, there is ongoing news of carbon trade deals signings in Papua New Guinea.

Government and greedy individuals take advantage of the lack of carbon trade laws and are exploiting the carbon market of Papua New Guinea, threatening this country’s forest resources. Added to the lack of government policies on carbon trade is the lack of knowledge of carbon trade by the general public especially forest owning communities.  They do not know what carbon trade is, how it operates and how to distribute its benefits.

Government announced on 30 September 2021 that Papua New Guinea will open its first Carbon Trade business in the New Ireland Province[1].But, there is sketchy information on how the trade should be conducted or how its affairs will be managed.  Moreover, there is nil information on the benefits for the landowning communities.

This shows that the government trying to sign the deal and walk away with some millions as it does without letting the genuine and legitimate citizens so called stakeholders know of the deal. The idea of the carbon trading deal is not bad but the act or the approach the government is taking is not fair.

This country is not yet fully engaged in manufacturing sector and its rate of emission is very low unlike other countries. Therefore, PNG has a great potential of achieving reductions in the emissions of pollutants. It makes more economic sense to do carbon trading but that must be done under the sunlight and not under the moonlight where you struggle to find out who is doing what.

The government must take full responsibility of its commitments; make laws to regulate carbon trade business in this country. This will at least benefit the custodians of the forest and prevent greedy individuals from exploiting forest resources to their own benefits.

[1] date accessed 25/05/2022


  1. Thank you for your message. Now I understand what is Carbon Trade, with its benefits and consequences.
    So, we have someone came into our community and collected some money from us the landowner, telling us that this is for the registration of your ILG’s and household numbers..Can someone help me clarify this.


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