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Taiwan is enhancing its participation in international carbon markets through collaboration with Paraguay, following a memorandum of understanding signed in October to work on emissions reduction technologies under the Paris Agreement. Taiwan's Environment Minister Peng Chi-ming visited Paraguay in November to initiate pilot projects focused on afforestation and electric buses.

Taiwan aims to develop internationally recognized carbon credits, as it is excluded from state-to-state carbon trading under Article 6.2 of the Paris Agreement. Instead, Taiwan will utilize Article 6.4 to engage in the global carbon market.

The afforestation project targets one to five million square meters and could generate approximately 10 tonnes of carbon credits per hectare. A carbon credit demonstration agreement is expected to be signed in the first half of next year.

The electric bus initiative will transition Paraguay from diesel to electric buses, supported by renewable energy from the Itaipu Dam, aiming for credible emissions reductions. Both nations plan to establish a digital carbon credit registry and explore a bilateral emissions trading platform.