Ethiopia Enacts Carbon Market Proclamation No. 1436/2026 Establishing the Legal Framework for Carbon Trading, Climate Finance, and Sustainable Investment

The House of Peoples' Representatives of the Federal Democratic Republic of Ethiopia has enacted Carbon Market Proclamation No. 1436/2026 (the "Proclamation"), establishing Ethiopia's first comprehensive legal framework governing carbon market activities.The enactment of the Proclamation represents a significant milestone in Ethiopia's environmental and investment regulatory landscape. It creates the legal and institutional framework necessary for the development, authorization, registration, transfer, and regulation of carbon credits generated within Ethiopia while supporting the country's commitments under the Paris Agreement and other international climate instruments.Beyond advancing Ethiopia's climate objectives, the Proclamation seeks to create a transparent and credible regulatory environment capable of attracting climate finance, facilitating green investment, promoting technology transfer, and ensuring that the economic benefits derived from carbon market activities are distributed in a structured and equitable manner.

Prior to the enactment of the Proclamation, carbon market activities in Ethiopia were undertaken without a dedicated legislative framework. The absence of comprehensive regulation created uncertainty regarding carbon ownership, institutional responsibilities, project approval procedures, benefit-sharing arrangements, and regulatory oversight.The Proclamation addresses these gaps by consolidating the legal rules governing carbon markets into a unified statutory framework. In doing so, it establishes legal certainty for market participants, enhances transparency, strengthens institutional coordination, and aligns Ethiopia's carbon market regime with internationally recognized principles governing carbon trading and climate finance. Please read the full details in the attachment.