Norway cuts domestic climate funding and raises Article 6 credit purchases by more than US$1 billion

The Norwegian government announced on 7 October 2026, as part of its 2027 budget plans, that it will reduce funding for the Climate and Energy Fund, the country’s main vehicle for supporting domestic emission cuts and energy-transition investment. At the same time, it will raise spending on international carbon credits under Article 6 of the Paris Agreement by more than US$1 billion.

The decision scales up a programme Norway launched at COP29. The Norwegian Global Emission Reduction Initiative started with US$740 million to buy ITMOs from developing countries through bilateral Article 6.2 agreements. Its first partners were Benin, Jordan, Senegal and Zambia. Under Norwegian rules, financing for Article 6 credits is not counted as official development assistance.

Norway’s partner network has grown since then. In May 2026, it signed an agreement with Morocco to help finance about 2 GW of renewable capacity, including batteries, over 2026–36 through a generation-based incentive programme. Norway has also signed seven other Article 6.2 cooperation agreements, including one with Switzerland on cross-border CO₂ transport and storage.

The budget move reverses expectations from earlier this year. In February 2026, the Norwegian parliament voted to scrap the country’s 2030 climate neutrality target. At the time, experts warned this could weaken near-term demand for Article 6 credits. The 2027 budget points the other way: less domestic spending and more reliance on international mitigation.

Signals to watch

• Major demand boost for host countries: An additional US$1 billion or more in sovereign ITMO purchasing makes Norway one of the largest single buyers, alongside Switzerland, Japan, Singapore and Sweden. Host governments with Norwegian agreements, or seeking one, should expect faster procurement rounds. Developers in partner countries such as Morocco, Zambia, Senegal, Benin and Jordan should position for tenders.
• Policy risk cuts both ways: In February, analysts expected the loss of the 2030 neutrality target to suppress demand. Now the budget increases it. Investors should treat Norwegian demand as politically driven and budget-dependent, with exposure to annual parliamentary negotiations. Locking in long-term offtake contracts is more valuable than relying on spot appetite.
• Integrity and supplementarity scrutiny: Shifting money from domestic action to international credits will draw criticism from NGOs and parts of parliament on supplementarity grounds. Expect pressure on Norway to buy only high-integrity ITMOs, such as projects with strong additionality, corresponding adjustments and sustainable development benefits, which favours rigorously designed projects.
• Sector focus: Norway’s existing deals lean towards renewable power, storage and CCS. A bigger budget may widen the scope to industrial decarbonisation, methane and removals. Developers should watch Norway’s procurement criteria for eligible technologies.
• Parliamentary approval: The plan still has to pass Norway’s budget process. The final appropriation, and any conditions parliament attaches, will determine the real size of the demand signal.

Sources:

• Carbon Pulse – Norway cuts funding for domestic climate action
• Argus – Norway spending $740mn on Paris carbon credits
• Argus – Morocco and Norway sign Article 6.2 agreement
• Regjeringen – Norway launches initiative to cut emissions in developing countries
• Carbon Pulse – Norway scraps 2030 climate neutrality law