Introduction

Uganda has taken a bold step in its climate action journey by enacting the National Climate Change (Climate Change Mechanisms) Regulations of 2025. Developed under the National Climate Change Act Cap 182 and aligned with Uganda’s Nationally Determined Contributions (NDCs) to the Paris Agreement, these Regulations establish a clear legal framework for Uganda’s carbon markets. This article provides an overview of these Regulations.

What are Carbon Credits?

Carbon credits are tradable permits or certificates representing the right to emit one metric ton of carbon dioxide (CO₂) or an equivalent amount of other greenhouse gases (GHGs). Carbon credits are a key tool in emissions reduction strategies and can be generated through:

Credits are issued by regulatory bodies (in compliance markets) or independent standards (in voluntary markets) after verification. Companies or individuals buy them to offset their emissions or meet regulatory requirements.

What are Carbon Markets?

A carbon market is a (non-physical) marketplace or trading system where carbon credits are bought and sold. They exist in two main forms:

What is Carbon Trading?

Carbon trading is the process of buying and selling carbon credits in carbon markets. It works in two main ways:

What Governance and Institutional Frameworks are set under the Regulations?

The Ministry of Water and Environment (MWE) serves as the primary regulatory authority, with its Climate Change Department overseeing project registration, the accreditation of verifiers, coordination, and compliance monitoring.

Other key players include the project proponents (individuals or entities that apply to participate in the climate change mechanisms), who implement the projects with the Ministry’s approval, and the accredited verifiers, who conduct project validation and verification of emission reduction units.

The Regulations establish a chain that connects all these players, facilitating inter-institutional collaboration, regulatory compliance, transparency, accountability, and the integrity of Uganda’s participation in global climate initiatives.

What is the project approval and validation process under the Regulations?

The Project Approval and verification process is briefly as follows:

a) Submission of Application to participate. The Project proponent must submit a request (using Form 3) to participate in a climate change mechanism, accompanied by a project idea note (template in Form 4) and proof of registration in Uganda
b) Issuance of Letter of No Objection. The Minister will issue a letter within 21 working days. It remains valid for 24 months and can be extended upon request.
c) Application for Project Approval. The Project Proponent must proceed to apply for approval of the climate change mechanism/project (using Form 7) within the time of validity of the Letter of No Objection. This application must be accompanied by the following documents:
• A project design document (PDD) (Form 8)
• A feasibility study or business plan
• A recommendation from the relevant lead agency. For example, for a renewable energy project, a recommendation from the Ministry of Energy and Mineral Development will be required.
• A benefit sharing plan (Form 9) which demonstrates equity, fairness, engagement and consultation of beneficiaries and other interested groups.
d) Issuance of Approval. The Minister may issue an approval within 21 working days if satisfied with the application.
e) Project Implementation. Implementation of the project must commence within 12 months of project approval, and failure to commence may result in approval cancellation.
f) Project Validation. Upon receipt of the approval, the Project proponent must submit the project documents to a registered verifier for validation. Once a validation report is issued, the project proponent must submit it to the Minister together with the approved project design document.

What compliance obligations are in place for project proponents?

The Regulations provide various compliance obligations for project proponents or developers. Non-compliance carries fines or imprisonment depending on the circumstances. These obligations include the following:

a) Upon receiving a letter of no objection, the Project Proponent must every six months submit a progress report (using Form 6) of activities that the project proponent has initiated, carried out or completed. (Reg. 15)
b) Upon approval of the project, the project proponent must, within 6 months of commencement of the project, notify the Minister in writing of the project commencement. (Reg. 23(2))
c) The project proponent must submit a progress report (using Form 12) on the project to the Commissioner, Climate Change Department, in accordance with the reporting cycle specified in the PDD. (Reg. 24)
d) The Project proponent must, during the course of the project, prepare a monitoring report on the project emissions reduction in relation to baseline emissions in accordance with the PDD. This report must be submitted to a verifier for verification and then, once each year, be submitted to the Minister together with a verification report. (Reg. 25 & 30)

What is the procedure for credit issuance?

The Regulations require a registered verifier to apply on behalf of the project proponent to the standards referred to in the PDD for the issuance of Certified Emissions Reduction Units (CERUs). The standard may then issue a certificate of CERUs, which must be lodged with the Ministry for registration. (Reg. 31 & 32)

How can emissions reduction units be traded?

Emission units may be transferred both domestically and internationally.

A project proponent who wishes to transfer CERUs must notify the Minister within 30 working days before a transfer. The Regulations stipulate the details of the notice.

Domestic Transfers: Where a project proponent transfers CERUs to another person within Uganda, a report (Form 14) must be submitted to the Minister within 14 working days. (Reg. 36)

International Transfers: Where a project proponent wishes to carry out an international transfer of verified emission reduction units (VERUs), an application for authorisation (Form 15) must be made to the Minister. (Reg. 37)

What are the possible implications of the Regulations to Uganda’s climate action and the economy?

The Regulations present opportunities, such as Uganda having access to the international climate finance and participating effectively in global carbon markets. They also provide a framework to mobilise private investments.

Conclusion

With the National Climate Change Act, Cap 182, having come into force in 2021, these Regulations were clearly long overdue. Nevertheless, they represent a major development in Uganda’s climate governance. Through establishing clear rules for carbon markets, prioritising sustainable development, and ensuring transparent processes, Uganda is positioning itself as a responsible and proactive player in global climate action.

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