Nepal’s government and carbon project developer South Pole have agreed to develop a large-scale jurisdictional forest carbon program, with the credits it generates aimed squarely at demand from airlines under the CORSIA offsetting scheme and other buyers, Carbon Pulse reports. For buyers and investors, the deal adds a sizeable prospective supply of jurisdictional REDD+ credits designed from the outset for compliance use, and it shows host countries at COP31 converting readiness discussions into signed program agreements.
A signed agreement covering three provinces
The Ministry of Forests and Environment and South Pole signed the agreement on Saturday in Türkiye, where COP31 is under way in Antalya, according to Nepal News. Under it, a jurisdictional forest carbon program, known as J-REDD+, will be developed.
The program will cover more than 2.5 million hectares of forest across the Koshi, Karnali and Sudurpaschim provinces, according to Nepal News. The evening briefing of the same outlet describes the area as more than 2,500,000 hectares of forestland and confirms the formal agreement was signed on Saturday, Nepal News reports.
That scale puts the initiative among the larger jurisdictional forest programs announced at the conference. Nepal’s government framed the move as a bid to tap demand from airlines and other buyers, Carbon Pulse reports.
Built to the ART TREES standard
The program will be developed in accordance with the TREES standard of the Architecture for REDD+ Transactions, or ART, according to Nepal News. Its stated aims are to reduce greenhouse gas emissions resulting from deforestation and forest degradation, promote sustainable forest management and improve the control of forest fires.
Crucially for demand, the credits are intended for the international market in alignment with the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation, CORSIA, and with Article 6 of the Paris Agreement, Nepal News reports. That alignment is a design objective stated in the agreement, not yet an authorisation: no credits have been issued, and no transfer approvals have been announced.
Who does what under the deal
The agreement sets out a clear division of labour between the government and the developer, according to Nepal News.
On the government side, Nepal will establish the necessary policy and regulatory frameworks for the program. That includes defining rights related to carbon and land, setting safeguard standards, establishing benefit-sharing mechanisms and ensuring the Free, Prior and Informed Consent, or FPIC, of local communities. Each of those steps is a precondition for credible issuance, and each remains to be completed.
On the developer side, South Pole will provide support in the technical design of the program, investment structuring, the mobilisation of blended finance and the management of international carbon credit markets, according to Nepal News. The reference to blended finance indicates the program is expected to draw on a mix of public and private capital before credit revenues materialise.
The COP31 backdrop
The signing lands as Nepal’s delegation concludes its work at COP31 in Antalya. The country’s foreign ministerial leadership returned to Kathmandu on Saturday after leading the national delegation at the conference, where it pressed priorities including climate justice, Himalayan ecosystem preservation, adaptation financing and multi-hazard early warning systems, Nepal News reports.
Foreign Minister Shisir Khanal said on Friday that Nepal will strengthen preparatory measures, continuous diplomatic efforts and multilateral cooperation in climate change negotiations, and noted positive progress on the 1.5 degrees Celsius temperature limit goal, grant-based climate finance and a Mountain Work Programme to protect the Himalayas, Nepal News reports. The forest carbon agreement gives that diplomatic posture a concrete market instrument.
What buyers and developers should watch
First, program design and registration. The program must still be designed, validated and registered under ART TREES before any credit exists. The choice of crediting level, baseline and accounting approach will determine both volume and price positioning against other jurisdictional supply.
Second, the regulatory build-out. Carbon and land rights, safeguard standards, benefit-sharing and FPIC processes are all on the government’s to-do list. Their pace and quality will shape the integrity profile of the eventual credits and the confidence buyers can place in them.
Third, the path from alignment to eligibility. The agreement targets CORSIA and Article 6 alignment, but airlines buying for CORSIA compliance will look for host-country authorisation and the associated accounting treatment. Whether and when Nepal grants that authorisation will decide if these credits become a compliance-grade supply or remain a voluntary-market product. The first issuance volumes and any early offtake interest from aviation buyers will be the clearest signals to track.
