Faiza Tehseen

Pakistan must embrace carbon markets to attract investment, reduce emissions, and strengthen climate resilience as part of its efforts to fuel green transition.

"Carbon markets offer a pathway to mobilise finance to climate mitigation projects, help in incentivising the emission reduction, and strengthen a low-carbon economy. “Establishing a carbon credit trading system helps drive down emissions, lower energy costs, and attract private investment in renewable energy and other eco-friendly technologies. So, it is important that initiatives should be taken for developing a carbon credit market mechanism in Pakistan,” noted Ejaz Nizamani, former conservator and ex-secretary of Sindh Forests and Wildlife Department.

Speaking to WealthPK, he said: “The country’s National Carbon Market Policy promotes a cap-and-trade system and credit-based mechanisms that enable businesses to buy, sell, or offset their carbon emissions. The policy aims to monetise emission reductions and channel revenue into climate adaptation and mitigation across key sectors such as energy, agriculture, waste management, and forestry.”

Quoting the example of the Sindh government’s Delta Blue Carbon-1 project, he said that this project has successfully tapped into the global carbon credit market. “The initiative generated $40 million in revenue by sequestering approximately three million tonnes of CO₂ through the restoration of over 100,000 hectares of mangroves. In addition to environmental benefits, the project created around 21,000 sustainable jobs for coastal communities,” he pointed out.

Nizamani said that to meet its climate goals, Pakistan must fully leverage carbon markets to accelerate the adoption of clean technologies and attract sustainable, long-term investment. Highlighting the importance of establishing carbon markets for Pakistan’s green transition, Muhammad Saleem, environmentalist and Deputy Director Communications, Ministry of Climate Change and Environmental  Coordination, said: “Carbon markets are emerging as a crucial engine for Pakistan’s environmental and economic transformation.”

Talking to WealthPK, he said Pakistan could earn between $200 million and $500 million annually through carbon credit sales up to 2030. “These earnings could be reinvested in projects that enhance the country’s climate resilience.” Saleem said, “To strengthen its carbon market infrastructure, Pakistan is actively participating in the Verified Carbon Standard programme, which supports the development of methodologies and technical capacity in sectors like agriculture, forestry, and land use.

The programme also plays a critical role in educating stakeholders and ensuring the credibility of carbon market initiatives.” The ministry official said that establishing a transparent governance framework is essential for the success of the carbon market. “The distribution of revenue from carbon credits must be handled equitably among stakeholders, including the federal and provincial governments, the Pakistan Climate Change Fund, and projects aligned with Pakistan’s Nationally Determined Contributions.”

However, he said Pakistan faces several challenges in scaling up its carbon markets, including the need for robust regulatory structures, technical expertise, and inclusive policies. “It is also imperative to ensure that revenues benefit vulnerable communities and that transparency remains a cornerstone of all carbon-related transactions.”

Credit: INP-WealthPk