Abdul Ghani

The climate change ministry has formally requested Rs1 billion in seed money from the Finance Division to establish the Pakistan Climate Change Fund (PCCF) — a landmark initiative aimed at financing national climate adaptation and mitigation projects.

According to the documents obtained by Wealth Pakistan, the Fund is being created under Section 12 of the Pakistan Climate Change Act 2017 to mobilize financial resources for climate resilience, sustainable development, and environmental protection. Once operational, it will serve as Pakistan’s primary financing mechanism to support both domestic and international climate commitments, including those under the Paris Agreement.

The request for Rs1 billion is intended to provide the initial capital required to operationalize the Fund. However, officials confirmed that while the proposal has been sent to the Finance Division, no allocation has yet been approved. The climate change ministry emphasized that the Fund’s establishment was critical to addressing Pakistan’s growing vulnerability to extreme weather events, floods, droughts, and rising temperatures. The Draft Climate Fund Rules, already vetted by the Ministry of Finance and Law Division, outline the structure and governance of the Fund.

The rules are now awaiting final approval from the federal minister for climate change and environmental coordination. Under the proposed framework, the Fund will be managed by the Pakistan Climate Change Authority and governed by three key committees — a Fund Management Committee for decision-making, a Fund Technical Committee for project evaluation and monitoring, and a Fund Investment Committee to guide financial and investment strategy.

The Fund’s sources of financing will include government allocations, endowments, donations, and profits from investments. It will also receive receipts from carbon projects and other revenue-generating initiatives of the Authority. The ministry hopes to attract international development partners and private sector investors once the initial seed money is secured.

Under the proposed disbursement plan, 40 percent of the funding will be directed toward climate adaptation projects, 30 percent toward mitigation projects, and 20 percent toward capacity building, research, and communication. Up to 10 percent will be reserved for administrative expenses.

To ensure broad participation, the Fund will introduce a tiered grant system. Small grants of up to Rs5 million will support community-level projects and NGOs, while medium grants ranging from Rs5 to Rs50 million will support scalable initiatives in the public and private sectors.

Large grants exceeding Rs50 million will finance multi-sectoral, transformational projects with long-term impact. Additionally, a co-financing scheme will allow private sector participation at a ratio of 1:2, encouraging private investment in green ventures. Officials described the request for Rs1 billion as a “critical first step” toward operationalizing the Fund, enabling Pakistan to institutionalize climate finance and reduce reliance on ad-hoc international aid.

They added that the establishment of the Fund would allow the country to respond more effectively to climate disasters while building long-term resilience and supporting low-carbon development pathways. Once approved and funded, the Fund is expected to become a cornerstone of the country’s environmental and economic sustainability framework, helping channel investments into projects that directly address the risks of climate change.

Credit: INP-WealthPk