Paraguay’s law on carbon credits establishes general procedures for issuing and monetizing carbon credits under voluntary schemes, along with provisions for international transfers. It also mandates the creation of a carbon credits registry and outlines penalties for non-compliance. The carbon credits registry, situated under the Ministry of the Environment and Sustainable Development [Ministerio del Ambiente y Desarrollo Sostenible (MADES)], serves to record data related to any mitigation project aiming to acquire carbon credits within the voluntary market. Participation in the voluntary carbon market, as per the law's provisions, requires demonstrating registration of carbon credits in the carbon credits registry.
Projects must demonstrate additionality, regardless of their origin, which may come from the following sectors:
- Forestry and land use;
- Agriculture and livestock;
- Waste;
- Energy;
- Transportation;
- Industrial processes and product use (IPPU);
- Others deemed applicable by the implementing authority.
Further Considerations
- The law allows registration of carbon credits in other public or private, national, foreign, or international registries if needed by the holder.
- Transfer of carbon credits is exempt from Value Added Tax.
- Paraguayan labour must constitute at least 50% of actual participation in each project, including technical professionals.
- Administrative fees can be up to 500 minimum daily wages. Given that one minimum daily wage is equivalent to PYG 103,091, 500 minimum daily wages amount to PYG 51,545,500 (approximately USD 6.87, exchange rate of 1 USD = PYG 7,507.73 as of May 21, 2024).
- To ensure compliance with the country’s nationally determined contributions (NDC), carbon credit holders must retain and not transfer a percentage of such credits derived from the same project, ranging from 3% to a maximum of 10% as determined by the implementing authority.
