The Colombian government has initiated the revocation of the decree that established the regulatory framework for the country's carbon market, minister of environment Fabio Arjona said on 29 September during Medellin Climate Week.
The original decree will remain in force while the new framework is developed.
The government made this decision for legal reasons, but it does not mean Colombia is abandoning carbon markets, Arjona said. The government intends to build a new regulatory framework that is more legally robust, encourages co-ordination between relevant entities, and ensures environmental integrity.
The government plans to propose a provision within the new framework that would allow companies to offset up to 100pc of their emissions with carbon credits, exempting them from the carbon tax. The previous decree permitted this mechanism, but only 50pc of emissions could be covered with voluntary credits. This provision has been a key driver of credit demand in Colombia, as it created regulated demand linked to the mandatory tax.
The original decree was adopted on 4 August, three days before left-wing former president Gustavo Petro was succeeded by the current far-right leader Abelardo de la Espriella. The decree created Colombia's regulatory framework for carbon markets and carbon pricing instruments, strengthening the country's carbon tax on fossil fuels used for combustion, while also regulating the use of voluntary credits within the market.
But de la Espriella's government found that the original decree lacked clear explanation of interaction with relevant ministries, such as the Ministry of Treasury or the Ministry of Industry and Commerce. Authorities also found that the text had been "substantially modified" from its previous proposals without undergoing proper public consultation, which Arjona said is a clear reason to establish stronger institutional co-ordination.
