UNDP urges Sri Lanka to formalize carbon market policies to unlock private climate finance

The UNDP has called on Sri Lanka to urgently formalize its carbon market policies to attract private investment. During the 2026 Sri Lanka Climate Summit, UNDP Resident Representative Azusa Kubota said that climate targets alone are not enough and must be backed by clear operational plans. She noted that global private sector climate finance has surpassed one trillion dollars, and Sri Lanka needs to send clear signals to access these funds. Key recommendations include official approval for carbon projects, strict accounting rules to prevent double counting, and transparent benefit sharing models. The UNDP also warned that recent government interventions, such as banning renewable energy developers from selling carbon credits under new power purchase agreements, have damaged investor confidence. Sri Lanka faces over 50 billion rupees in annual climate damages and needs an estimated 1,000 billion rupees for recovery in the next three years. To attract private capital, the UNDP emphasized removing restrictive policies and introducing mechanisms to reduce investment risk. The country has shown interest in Article 6 of the Paris Agreement, but efforts to establish a national carbon credit trading system are stalled. The message is clear: move from conceptual goals to practical implementation.