Daily Times

“Tragedy of the Horizon” is a term used to explain the global risk arising from the inherent disparity between short-term planning regarding sustainable economic development and the long-term adverse impacts of climate change. This term perfectly encompasses the tragedy in the form of climate change, natural resource degradation, environmental degradation and food insecurity looming on the horizon due to the disparity between the institutional policies and on-the-ground implementation regarding Pakistan’s sustainability journey across the various economic sectors. We can hear the terms Net Zero, Carbon Neutral, Zero Carbon, Carbon Negative or Carbon Capture echoing in the policy-making corridors of Pakistan but are these concepts being integrated or considered in the various public and private projects being launched in Pakistan? Currently, Pakistan must lower its growth rate of emissions to reach a credible path toward zero. It is time that we shift the conversation from futuristic net-zero ambitions toward practical, equitable, and achievable emissions trajectories.

Investment in carbon capture, utilization, and storage (CCUS) projects, that turn carbon dioxide into useful and saleable products, may prove to be an important step in Pakistan’s Net Zero journey. CCUS is a process that captures CO2, produced as part of an industrial process or even directly from the atmosphere, before transforming it into something useful like concrete, plastic, or even other fuels. Under the Green Banking ideology, the Pakistan banking industry can expand the green financing portfolio by financing projects focusing on carbon utilization by turning captured CO2 into industrial-grade polyols. These are chemical compounds that can be used to make coatings for household appliances, packaging as well as consumer and industrial adhesives. The resulting products, from this carbon capture technology, also have applications in the automotive and medical industries. Recycling of emitted CO2 is a great example of the Circular Economy in action. This technology not only reduces carbon emissions but also develops products that are more practical, comfortable, and environmentally friendly. Countries are working on Mobile Carbon Capture (MCC) technology that captures CO2 from the exhaust systems of vehicles and then recycles it to process into new materials or energy. Carbon capture and utilization technology are also being applied to the energy generation sector as well as the cement, chemicals, fertilizer, and beverage industries.

Pakistan must lower its growth rate of emissions to reach a credible path toward zero.

According to global statistics, the CCUS projects continue to grow worldwide depicting a growth rate of 44 per cent over the past year. According to the International Energy Agency, approximately 1,300 million metric tons of CO2 need to be captured and stored annually by 2030 to put the world on a path to net-zero emissions. The completion of the current global CCUS projects will enable the storage of approximately 244 million metric tons of CO2 per year, which is much short of the required target. This gap signals a green finance investment opportunity in the CCUS sector for the banking sector. In the year 2022, the USA passed the Inflation Reduction Act, which introduced a major tax credit for the carbon capture industry by increasing the government subsidy for capturing CO2 from polluting sources and simplifying the process for receiving those tax credits. China is also focusing on CCUS projects and equity investment in carbon-related assets.

The Government of Pakistan can develop the country’s carbon market by implementing a carbon tax system, establishing an emission trading system and providing subsidies or tax rebates for various CCUS projects. The regulatory authorities may place GHG emission caps for certain sectors or a crediting system which allows companies to buy emissions on a project-to-project basis. Pakistan can also benefit from selling carbon offsets from reforestation projects like the Billion Tree Tsunami, Alternative Energy or other green projects. However, climate change experts have termed carbon capture projects as a delaying tactic by the developing world to avoid shifting from fossil fuels and moving towards a net zero path. The various global carbon capture projects have been termed as a band-aid rather than a cure for the climate change challenges plaguing our planet. It must be understood that the CCUS projects may serve as a temporary solution towards reducing carbon emissions but the ultimate road towards sustainable economic development is through the development of a net zero world.

With the passage of time, more and more countries are committing towards achieving net zero emissions, but it needs to be realized that such a commitment requires a whole-of-government, whole-of-economy effort. Just this year we’ve seen the increasingly devastating effects of climate change in the form of unprecedented floods in Pakistan. This will only get worse if we fail to act and truly commit towards achieving net zero emissions across all economic sectors. The climate change tragedy is not far away from us rather we are witnessing the dawn of this horizon each and every day in the form of smog, floods, heat waves, and water, gas, electricity, and food shortages. According to the Intergovernmental Panel on Climate Change report, in order to avoid the worst consequences of climate change, the deadline for the world to reach net zero is the year 2050. To reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around US$ 4 trillion. Pakistan needs steadfast policies to reach net zero and staunch financial support for green projects. Pakistan’s banking industry, especially the Islamic banks, can play a vital role in this regard by providing green financing and issuing Green Sukuk for various net zero projects across the industrial sectors. It is time that all stakeholders work together by focusing on long-term, holistic, and sustainable solutions to this climate change challenge threatening the existence of our future generations.

The writer is working as a Chief Manager (Green Banking Office, Bank AL Habib Limited, Pakistan) and can be contacted at aasimalibukhari@yahoo.com.