Colombia’s carbon market rulebook, finalised just weeks ago, is now being dismantled by the government that inherited it. On Tuesday, September 29, environment minister Fabio Arjona announced that the administration of President Abelardo de la Espriella has begun the process of revoking the carbon markets decree issued by the previous administration in August, and is proposing to restore full, 100% offset use under the national carbon tax. For buyers and project developers, one of Latin America’s most active offset supply markets has signalled both a regulatory reversal and a potential doubling of its compliance-linked demand channel in a single announcement.
What the Government Announced
According to Carbon Pulse and Quantum Commodity Intelligence, Arjona said the government has started the revocation procedure for the decree that introduced stringent rules for the country’s carbon markets. In parallel, the minister is calling for the carbon tax offset mechanism to return to 100% usage, up from the current 50% cap.
The timing is notable. The de la Espriella administration took office in mid-August, days after the outgoing government published the decrees. The revocation targets a regulation that is barely seven weeks old and had not yet been fully implemented.
The Rulebook Being Rolled Back
The August package had two pillars. Decree 0969, published on August 4, established the regulatory framework for Colombia’s cap-and-trade ETS, known as the PNCTE, according to ICAP. A companion regulation, identified by KPMG as Decree 973, introduced the broader regulatory framework for carbon markets and carbon pricing, including rules for carbon credit projects and market oversight.
The package closed a regulatory gap that had existed since 2018, when the Climate Change Management Law (Law 1931) created the PNCTE and mandated full ETS operation by 2030. But parts of the framework drew friction from market participants even before it was final: reporting by Quantum Commodity Intelligence in early August noted support for the push toward clearer rules and better oversight, alongside warnings that the accreditation requirements could restrict market entry.
Whether the revocation also touches the ETS decree is not yet clear from public statements. The announced target is the carbon markets regulation; the legal and operational status of the PNCTE framework under the new government remains an open question.
Why the 100% Offset Proposal Matters
The carbon tax, in force since 2017 and extended to coal in 2025, is the real demand engine for Colombian credits. Its attached offsetting mechanism lets regulated entities cancel part of their tax liability with carbon credits, a share that was cut to 50% under the previous administration’s tax reform.
That channel is large and active. Quantum Commodity Intelligence data show that carbon tax retirements dominated Colombia’s market in the last week of September, with 449,318 tonnes of CO2 equivalent retired by obligated companies, including fuel distributor Primax Colombia, in a single week. Restoring the offset share to 100% would double the theoretical ceiling of this compliance-linked demand, at a time when the country’s project pipeline, built largely to serve exactly this mechanism, is looking for price signals.
For credit suppliers, the direction of travel is unambiguous: more addressable demand per tonne of tax liability. For buyers, the implication cuts the other way. A wider offset channel tightens domestic supply availability and could lift prices for Colombian credits that international buyers currently source through voluntary transactions.
Regulatory Whiplash Is Now the Pricing Risk
The harder problem is not the direction of policy but its volatility. Colombia has now produced two opposite carbon market frameworks in under two months: one written by an outgoing administration, one being dismantled by its successor. Each swing reprices the same assets.
A revocation procedure must run its legal course, and the replacement rules, including any restoration of 100% offsetting, may require tax law changes rather than a simple decree. Contracts and forward offtake agreements written against the August framework now carry explicit regulatory risk. Developers with projects mid-validation under the revoked rules face the most immediate uncertainty, because the accreditation and oversight requirements they were designing against may not survive.
What to Watch
Three markers from here. First, the formal revocation text: its scope will show whether the ETS decree survives intact or whether the entire August package is reopened. Second, the legal route chosen for the 100% offset restoration, since a change embedded in tax law is far more durable than one made by decree. Third, the reaction of the domestic project pipeline and of fuel distributors, the buyers who actually drive tax-related retirements: their contracting behaviour in the fourth quarter will reveal whether the market prices the proposal as a done deal or as the opening position of another negotiation.
