Colombia National Program of Tradable Greenhouse Gas Emission Quotas

In 2018, Colombia adopted a law for climate change management (“Climate Change Law”, Ley de Cambio Climático), which outlines basic provisions for the establishment of an ETS, or the “National Program of Tradable GHG Emission Quotas” (Programa Nacional de Cupos Transables de Emisión de Gases de Efecto Invernadero – PNCTE). Non-compliance is to be punishable by a fine of up to double the auction price. Auction revenues, as updated by Article 262 of Law 2294 of 2023, will now be allocated to the “Fund for Life and Biodiversity” (formerly the “Fund for Sustainability and Climate Resilience”). These resources are designated for purposes set by the national carbon tax, as well as for administering the PNCTE and the Mandatory Emissions Report under Law 2169 of 2021 (the “Climate Action Law”, Ley de Acción Climática). The Climate Change Law also includes crediting provisions: voluntary actions of non-regulated entities that generate GHG emissions reductions or removals may be issued allowances if they are verified, certified, and registered in the National Emission Reductions Registry (Registro nacional de reducción de emisiones de GEI – Renare), and deemed eligible for the program.

On September 2024, the Colombian government opened a public consultation on the Decree for the regulation of the PNCTE. According to the consultation document, the PNCTE would have several phases leading to full implementation of the system in 2030. Minambiente would publish the cap annually, and the caps of the introductory period (2025 to 2030) would be in line with the NDC goal of emitting a maximum of 169.44 MtCO₂e in 2030. Minambiente would also be in charge of determining covered entities and emissions, as well as allocation methods; auctioning is expected to be the main method. Banking of allowances would be allowed within the same implementation phase. The draft Decree proposes a reference price for allowances equal to the carbon tax rate and specifies that Minambiente may define a starting auction price. Monitoring periods would be one calendar year.

The draft Decree would establish the preliminary phase in accordance with the graduality principle of the PNCTE. The objectives of the preliminary phase would be to test and adjust the operational rules of the PNCTE, generate information to evaluate the design elements of the system, contribute to the achievement of the mitigation goals, and identify opportunities for improvement before the start of the second phase.  

The 2021 Climate Action Law sets a goal to fully implement the ETS by 2030, as well as an obligation for legal persons to report direct and indirect GHG emissions, following criteria to be set by Minambiente.