Dominican Republic designs pilot emissions trading system under Climate Change Law

The Dominican Republic's environment ministry began designing a national pilot Emissions Trading System under Article 129 of Climate Change Law No. 94-20. The market-based carbon pricing model adds to the global precedent set as India weighs its own carbon market architecture.

The Ministry of Environment and Natural Resources of the Dominican Republic initiated the design of a national Emissions Trading System, stemming from Article 129 of Climate Change Law No. 94-20, which mandates carbon pricing instruments to support decarbonisation. The design is being carried out with the UNFCCC Regional Collaboration Centre and the World Bank's Partnership for Market Implementation. The pilot ETS will initially focus on high-emissions-intensity sectors, primarily energy and industrial processes, covering selected installations based on emission thresholds, reporting capabilities, and mitigation potential.

Regulated installations in energy and industrial processes are first affected, alongside businesses, civil society, and subnational authorities engaged in stakeholder consultations to co-design rules. A legal and regulatory framework is being drafted covering cap-setting, allowance allocation, monitoring and verification, and compliance enforcement, supported by a national registry, data management systems, and sectoral benchmarks. The system will feature both fixed allowances and auctioning, with a portion of revenue directed toward adaptation and low-carbon transition funds, balancing environmental integrity with economic competitiveness.

Regulated industries should prepare for new compliance obligations and engage in ongoing stakeholder consultations. The ETS is designed for compatibility with future international carbon markets, enabling potential linkages under Article 6 of the Paris Agreement, which entities should monitor. Lessons from the pilot will inform future regulatory reforms and sectoral expansion through 2030, embedded in the country's Nationally Determined Contributions and supporting a 27% reduction in greenhouse gas emissions by 2030 against business-as-usual scenarios.

Key figure — GHG reduction target: 27% by 2030 versus business-as-usual