Bhutan and Singapore are finalizing the administrative procedures to operationalize their signed Implementation Agreement on carbon trading, paving the way for the transfer of high-integrity carbon credits between the two countries.
According to the Ministry of Energy and Natural Resources (MoENR), technical teams are preparing essential documents, including the Application Form, Authorization Form, and Internationally Transferred Mitigation Outcomes (ITMO) Transfer Form. These forms are designed to guide project developers in designing, implementing, and selling eligible carbon projects in Bhutan.
An official from the Ministry explained, “These documents will streamline processes and ensure transparency and accountability in the transfer of carbon credits, which are vital for Bhutan’s participation in international carbon markets.”
Work is also underway to establish fee structures, methodologies, and arrangements for joint committee meetings, as well as the process for opening applications for carbon projects in Bhutan. The government plans to launch these applications during the upcoming COP30 conference in Belém, Brazil, in November 2025.
“The move demonstrates Bhutan’s readiness to engage in Article 6.2 bilateral cooperation and kickstarts its active participation in the global carbon market,” said the official.
Bhutan’s National Carbon Registry is now fully operational, serving as a platform to track, record, and trace carbon credits. Integrated with the Climate Action Data Trust, the registry also features transaction capabilities, ensuring transparency in all carbon trading activities.
In addition, the Bhutan Climate Fund, managed by the Department of Environment and Climate Change (DECC), will oversee the aggregation and management of carbon credits generated from domestic projects. “This fund will reinvest revenues from carbon trading into climate-related initiatives, ensuring that benefits directly support sustainable development within Bhutan,” the official said.
Bhutan remains committed to expanding its renewable energy sector, including hydropower, solar, and wind projects, which could significantly benefit from carbon trading revenue. According to MoENR, ongoing and planned renewable projects collectively offer a mitigation potential of approximately 15.4 million tonnes of CO2 equivalent (tCO2e).
The government has also identified nine eligible project types under both Article 6.2 and Article 6.4 mechanisms through bilateral cooperation and the Paris Agreement Crediting Mechanism (PACM). Discussions between the Department of Forest and Park Services (DoFPS) and DECC with potential buyers for forestry credits are ongoing, with an expected issuance of about 1.2 million credits. Once the application process under the bilateral agreement with Singapore is fully operational, eligible projects will enter the implementation phase, generating additional credits for international markets.
Currently, Bhutan has received four carbon project proposals under voluntary and compliance markets, which are in development and expected to move toward implementation and credit issuance in the coming months.
Bhutan’s engagement in bilateral carbon trading with Singapore underscores its proactive and forward-looking approach to climate action and sustainable economic development. By integrating ambitious renewable energy initiatives, a robust and fully operational carbon registry system, and clearly defined frameworks for carbon market participation, Bhutan is positioning itself as a credible and influential player in the global effort to reduce greenhouse gas emissions.
The country’s approach goes beyond compliance; it reflects a strategic vision to harness carbon markets as a tool for sustainable growth, channeling environmental stewardship into tangible economic and social benefits. While the full economic impact of these initiatives will become more evident as projects advance and carbon credits are issued, the government’s commitment demonstrates a deliberate and coordinated effort to leverage international climate cooperation to achieve dual objectives: protecting the environment and advancing national development goals.
This approach is closely aligned with Bhutan’s Nationally Determined Contributions (NDCs) under the UNFCCC, reinforcing its global reputation as a climate-resilient, environmentally conscious nation. By blending innovation, policy foresight, and strategic international partnerships, Bhutan is setting a model for small nations seeking to balance ecological integrity with economic progress, ensuring that sustainable development is not just a goal, but a practical and measurable reality.
Sherab Dorji
From Thimphu
