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Laws and Policies

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Climate Change (Management) (Carbon Markets) Regulation 2025

The Climate Change (Management) (Carbon Markets) Regulation 2025 of Papua New Guinea establishes a legal framework for administering carbon markets, identifying carbon rights, and regulating mitigation activities.

Governance
Permit Review Committee: The regulation establishes a Permit Review Committee of officials from the Climate Change and Development Authority (CCDA) to assess permit applications, monitor mitigation activities, and advise the Managing Director.
Note- 'Permit' here refers to Sustainable Development Mechanism (SDM) permit or a Voluntary Carbon Market (VCM) permit, which allows a person to conduct mitigation activities that contribute to the mitigation of GHG emissions and support sustainable development in accordance with Article 6 of the Paris Agreement.

Register
1. The regulation mandates a central register to track permits, carbon rights, FPIC documentation, and the generation and sale of carbon credits.
2. It also requires compliance with Environmental Integrity Principles to avoid double counting and ensure additionality.

Carbon Rights
Primary Carbon Rights: Primary rights are typically held by those with an original, underlying legal interest in the land or technology where the carbon is stored or reduced.
1. A person or group with customary ownership of the land where a mitigation activity takes place is considered a primary carbon rights holder.
2. Individuals or entities granted legal rights over land and specific technology (used in the mitigation activity) by other laws (such as leases or state grants) also possess primary carbon rights.
Note- Holding a primary right does not automatically allow a person to conduct a mitigation activity; they must still follow the regulatory process for permits.

Secondary Carbon Rights: Secondary rights are "usage and trading" rights granted by the state to a developer or person authorised to manage a carbon project and should compulsorily have a valid permit issued by the authority.
1. This right gives the holder the legal power to conduct mitigation activities, generate carbon credits, and sell or transfer those credits on the market.
2. It grants the holder free and unimpeded access to the project area (land or technology) to carry out the required activities, subject to the law.
3. A critical condition of holding a secondary carbon right is the legal requirement to share the financial benefits with the primary carbon rights holders.

Free, Prior and Informed Consent
Requires project proponents to obtain the collective, uncoerced consent of primary rights holders. This involves at least three consultations and the submission of a "Certificate of Consent" to the Authority.

Mitigation Activities and Trading
Mitigation Activities: Defines three approaches for activities: Project (requiring a VCM or SDM permit), National (coordinated by the Authority for national targets), and International Cooperation (bilateral agreements under the Paris Agreement).
Carbon Trading: Outlines the formula for converting activity data into carbon credits. It requires permit holders to register credits and remit net proceeds into local bank accounts.

Benefits Sharing
The regulations has set principles for fair and transparent distribution of benefits. It requires a Benefit Sharing Plan and Agreement, and mandates that 7% of total revenue from credit sales be paid to the Authority.

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

People who are less able to respond to the effects of climate change due to having limited financial or physical assets

Compulsory, required payments to the government that are levied more-or-less in proportion to the services provided. Fees and charges range from entrance fees to national parks, charges on land-based sewage discharge.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

Using laws and the legal system more broadly to protect vulnerable entities

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Actions and measures to adapt and increase resilience of societies and the economy to climate change.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Analysing climate change as a political and ethical issue, recognising how it -- and the exploitation of natural resources broadly -- impacts people, communities and countries differently and disproportionately.

Social inclusion is the process of improving the terms on which individuals and groups take part in society—improving the ability, opportunity, and dignity of those disadvantaged on the basis of their identity.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

People with different national or cultural traditions from the dominant population

Social and cultural groups that share collective ancestral ties to the lands and natural resources where they live, occupy or from which they have been displaced

woman and genders outside of the gender binary

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

the fair distribution of risks and opportunities of climate change and the transition to a regenerative economy, cognisant in particular of disproportionate impacts on vulnerable communities and the working class

Procedural justice means ensuring that decision making is fair and inclusive, emphasizing the agency and influence of vulnerable groups and those most impacted.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

Climate Change (Management) (Carbon Markets) Regulation 2025

Policy instrument

Risk

Impacted group

Just transition

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance