Asunción, Agencia IP.- The recent upgrade of Paraguay’s sovereign credit rating to BBB- by Standard & Poor’s Global Ratings represents a strategic opportunity to consolidate and scale the development of carbon markets, by strengthening international confidence, improving financing conditions, and expanding the pool of investors interested in emissions mitigation and removal projects, according to an analysis conducted by the Paraguayan Director of Carbon Markets, Víctor González Bedoya.
As the senior official explained in an exclusive interview with this outlet, investment-grade status goes beyond the strictly financial sphere. It serves as an international signal of lower country risk and greater macroeconomic predictability, factors that are decisive for the viability of climate projects requiring significant upfront investment. In particular, he noted that carbon projects require resources for measurement, monitoring, and audits, as well as for implementing measurement, reporting, and verification (MRV) systems, costs that can be financed under more favorable conditions when the macroeconomic environment is perceived as stable.
González Bedoya emphasized that this improvement in risk perception tends to be reflected in a reduction in the risk premium and a more competitive cost of capital, allowing initiatives that previously failed to reach financial closure to become viable. This is compounded by the expansion of the universe of potential investors and buyers, as a significant share of institutional capital, especially from funds with conservative profiles, concentrates its investments in jurisdictions with clear rules, stability, and operational transparency.
Trust is the core asset of carbon credits
In his analysis, the National Director underscored that in carbon markets, trust is not an abstract concept but rather the central asset that sustains the value of a credit. A carbon credit does not represent only a ton of emissions reduced or removed; it also embodies a chain of guarantees covering how the result was measured, who verified it, how it was registered, how traceability is ensured, and how double counting is prevented.
In this regard, he pointed out that positive macroeconomic signals are reinforced when the country advances in building and consolidating a national carbon market framework that makes investment in environmental assets predictable. This entails defined procedures, consistent criteria, operational registries, effective traceability, and technical capacities that enable dialogue with investors and buyers to focus on project quality rather than underlying uncertainties.
Rising requirements and international standards
González Bedoya also explained that the voluntary carbon market is undergoing a phase of greater integrity requirements, with an emphasis on criteria such as additionality, permanence, leakage risk management, social safeguards, and transparency. Under Article 6 of the Paris Agreement, these requirements become even more stringent, as evaluation extends not only to project quality but also to the country’s institutional capacity to authorize transfers, register transactions, and sustain consistent accounting rules, including international traceability and the application of corresponding adjustments to avoid double claims.
In carbon markets, trust is not an abstract concept but rather the central asset that sustains the value of a credit. A carbon credit does not represent only a ton of emissions reduced or removed; it also embodies a chain of guarantees covering how the result was measured, who verified it, how it was registered, how traceability is ensured, and how double counting is prevented.
Climate finance and institutional capital
The National Director’s analysis also drew on global trends. In recent years, significant pension funds and institutional investors have begun allocating capital to platforms and projects capable of generating carbon credits, particularly those linked to nature-based solutions.
This type of capital, he explained, rarely enters the market by purchasing credits in isolation. More commonly, it directly finances assets or projects, such as land, forestry, sustainable agriculture, or portfolio developers, through debt or equity instruments, while securing revenue predictability through forward purchase agreements, ERPA, or offtake arrangements. In this structure, carbon credits serve as a complementary revenue stream that enhances bankability when credit rights are clearly defined, and MRV integrity and registry reliability are ensured.
Paraguayan Director of Carbon Markets, Víctor González Bedoya.
Strategic outlook for Paraguay
Finally, González Bedoya stated that Paraguay’s strategic challenge lies in transforming the financial confidence associated with investment-grade status into market confidence in environmental assets by combining macroeconomic stability with technical and institutional integrity.
«If this combination is sustained, Paraguay can not only attract financing and buyers, but also build a reputation as a reliable provider of high-integrity mitigation outcomes,» he said, emphasizing that in carbon markets, reputation, when backed by robust systems and verifiable data, has a value equivalent to that of financing itself.
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