News Directive Paves Way for Carbon Credit Transactions in Ethiopia
August 2, 2025
Experts at the Ministry of Agriculture are drafting a directive that will lay the legal groundwork for the buying and selling of carbon credit ownership rights.
The ‘Forest Carbon Credit Ownership Rights’ directive builds on a May 2024 regulation from the Council of Ministers allowing private investors, as well as local communities, to engage in developing and safeguarding forests, and benefit from carbon sale revenues.
The Ministry defines a carbon credit transaction as a “transaction of carbon credit as per international methodologies, and certified by such actors” while tasking the Ethiopian Forestry Development (EFD), an autonomous federal institution, with registering transactions.
The directive seeks to grant carbon credit ownership rights to any person who protects forests and greenery on their property. An individual will also be eligible for ownership through cultivating a forest on their property or on property leased from other landholders.
In any case, the owner of the credits will be able to transfer the rights to the credits through a transaction.
According to the directive, the owner is obliged to protect the forest from any activities that reduce the carbon stock. These include averting cutting of the forest, as well as increasing the forest abundance by reforestation, improving forest health and buffering up the forest biomass.
Carbon credit transactions can be conducted as a standalone project between the owner and buyer, according to the draft.
The project also needs to be certified, and transactionary arrangements will phase out if the forest ceases to provide environmental benefits. Once a project phases out, the owner is obliged to retain project documents for at least ten years.
The directive looks to enable local communities in the vicinity of carbon credit projects to benefit from the transactions, while it states the federal government and regional administrations are also entitled to a cut from sales revenues. However, the draft does not specify what proportion of revenues will be allocated to the government.
The draft also prohibits the selling of one forest to multiple buyers.
Officials have stated they expect the directive to come into force soon.
Once approved, the government and development partners are expected to allocate funds to serve as a source of capital for carbon credit entrepreneurs.
The Ministry of Planning Development also has been working on the National Carbon Market Strategy (NCMS), which aims at positioning Ethiopia to achieve long-term low-emission economic development, while at the same time enabling the commercialization of the carbon market.
The government is also expected to offer credits from the ongoing Green Legacy initiative to interested buyers.