Armenia

Implementation period: 2026-2027 Funding amount: US$200,000 Window: Just-in-Time

Carbon pricing is emerging as an important policy instrument for achieving Armenia’s commitments under its Nationally Determined Contribution (NDC). Covering the period 2026–2035, Armenia’s NDC sets ambitious targets to reduce greenhouse gas emissions by 44% below 1990 levels unconditionally, and by up to 52% with international support, including through participation in international carbon markets under Article 6 of the Paris Agreement.

The Government of Armenia is pursuing a Medium-Term Revenue Strategy led by the Ministry of Finance.  As part of this effort, the country has adjusted fuel excise taxes over recent years to support revenue mobilization objectives. While this approach has contributed to revenue growth and may have influenced fuel consumption patterns, there is growing interest in transitioning from traditional fuel excise tax increases toward the introduction of an explicit carbon tax on fuel consumption. Such a shift would more directly target greenhouse gas emissions while supporting broader climate objectives.

To support these objectives, the PMI is assisting Armenia in several areas. This includes analyzing the integration of carbon pricing into broader pricing reforms, assessing the country’s potential exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM), and strengthening institutional and technical capacity for participation in international carbon markets, including through policy-based crediting approaches. These efforts aim to help Armenia develop effective carbon pricing policies while maximizing opportunities for international cooperation and climate finance support.