Colombia

Implementation period: 2024-2027 Funding amount: US$5 million Window: Implementation

Colombia has taken major legislative and institutional steps toward the development of a comprehensive carbon pricing framework. Following the 2017 implementation of a national carbon tax on gas and petroleum-derived fuels, coverage was extended to coal in 2025. The domestic offsetting mechanism linked to the carbon tax remains a key transitional tool, allowing regulated entities to offset up to 50% of their carbon tax liability. The country is now advancing the design of a national Emissions Trading System (ETS), the Programa Nacional de Cupos Transables de Emisiones (PNCTE), following its legal mandate in the 2018 Law for Climate Change Management. Full operation of the PNCTE is mandated for 2030.  

The country is also preparing to roll out the National Emissions Reporting System (ROE), which underpins facility-level emissions data collection and is a key building block for ETS readiness.  

Objectives & Activities

The PMI Program in Colombia supports the country in developing and operationalizing a national ETS and strengthening its overall carbon pricing architecture. Key areas of support include:

• Finalization of ETS Regulation and Institutional Design: Assist in completing the regulatory framework and defining institutional arrangements for the PNCTE, based on inputs from public consultations and international best practices.
• Development of the National Emissions Reporting System (ROE): Support the design, adequacy assessment, and rollout of the ROE, including capacity building for its implementation across sectors and subnational levels.
• Design of ETS Infrastructure and IT Systems: Provide technical support for the development of the ETS registry, as well as auctioning and trading platforms, ensuring alignment with ROE and interoperability with future domestic and international systems.
• ETS Pilot Phase Design and Implementation: Support the rollout of the ETS pilot, including capacity building for both public institutions and regulated private sector actors.
• Evaluation of Pilot Phase and Roadmap for Full Implementation: Conduct an independent evaluation of the pilot phase to inform the design of subsequent phases and ensure readiness for full ETS operation by 2030.
• Capacity Strengthening and Inter-Institutional Coordination: Enhance institutional coordination through the Project Steering Committee and technical working groups and build the necessary technical and legal capacity across key ministries and agencies.

Additional Resources

• Colombia Carbon Tax and Offsetting Mechanism – Ministry for Environment and Sustainable Development (Spanish)