On October 12, 2023, the President of the Republic of Paraguay signed and promulgated Law 7190/2023 on Carbon Credits. The new regulations provide the country with a specific regulatory framework for the development of projects that generate carbon credits for their commercialization in international markets, whether mandatory or voluntary.

Among other provisions, the new law designates the Ministry of the Environment and Sustainable Development (MADES) as the enforcement authority and creates the national Carbon Credit Registry, which will seek to provide order and transparency to the local market and avoid double accounting of emissions reductions. . Likewise, the standard contemplates measures to safeguard compliance with Paraguay’s Nationally Determined Contributions (NDC), including the obligation to retain between 3 and 10% of the carbon credits generated by each project, and measures designed to promote knowledge transfer to Paraguayan professionals and technicians. In order to encourage national and foreign investment in local projects, the law grants certain legal protections to properties destined for projects under development, providing legal clarity to the ownership and transferability of carbon credits, and exonerating the Value Added Tax. (VAT) the transfer of these.

MADES, as the designated enforcement authority, is now tasked with regulating and implementing the specific procedures required in the new law and ensuring compliance therewith.

Paraguay, with its 16 million hectares of forests, with the accelerated increase in its forest plantations, and with its vast availability of clean and renewable hydroelectric energy, has enormous potential for the international carbon credit market, whose global value in In 2023 it is estimated at about 1.2 trillion dollars, an amount that is estimated could double in the next 5 years.

FERRERE advises local and foreign clients, including landowners, project developers, investors, specialized funds, and end buyers, in the most significant transactions in the carbon credit market in Paraguay.

For more information contact:

Carla Arellano  | Counselor Ferrere | carellano@ferrere.com