Daily Times

However, there is some progress in the private sector or voluntary markets in Pakistan. Recently, the first tranche of carbon credits from the world’s largest mangrove restoration project have been sold in a series of major deals for the Blue Carbon market. Under this agreement Trafigura and Respira International will purchase up to three million carbon credits from Indus Delta Capital and Sindh Government later this year. It will sequester an estimated 142 million tons of CO2 emissions over 60 years.

Meanwhile, as part of its efforts to address climate change, Pakistan is exploring the possibility of introducing carbon pricing instruments at national level. “Carbon pricing” is a market-based strategy for putting a price on carbon emissions. Carbon pricing will not only help in achieving our current and future Nationally Determined Commitments (NDCs) but also strengthen Pakistan’s ability to participate in current and future carbon market activities.

A project titled ‘Collaborative Instruments for Ambitious Climate Action (CIACA) was conducted from 2016 to 2019 under the network of UNFCCC Regional Collaboration Centers (RCCs) to consider carbon pricing mechanism in Pakistan. In 2019, Ministry of Climate Change (MoCC) in collaboration with the UNFCCC and the Institute for Global Environmental Strategies, published a study titled “Introduction of Carbon Pricing Instruments in Pakistan”. It underlined potential for emissions trading in Pakistan in the power and industry sectors and introduction of carbon pricing to manage large-scale emitters responsible for around 27% of domestic emissions and the transport sector responsible for about 10% of domestic emissions.

Pakistan should make a strategy to establish institutional framework to show readiness to address the climate crisis.

The study highlighted some carbon pricing options for Pakistan along with their merits, challenges, and potential for alignment with other initiatives including domestic emissions trading scheme, carbon tax on petroleum-based fuels, economy-wide carbon tax , Carbon tax on coal, cosmetic offset mechanism ,transition from carbon tax to ETS (carbon tax first, ETS later) and energy efficiency certificate mechanism.

Thereafter, in the first national consultations on carbon pricing, representatives agreed that carbon pricing is worth exploring to reduce emissions and increase green investment but has to be compatible with Pakistan’s overall economic development objectives like poverty reduction, access to sustainable energy etc. It was agreed to learn from the experiences of other countries in developing and implementing carbon pricing instruments like tax on greenhouse gas (GHG) emissions or an emissions cap-and-trade system.

The main issues in Pakistan are insufficient technical, commercial and financial know-how for low-emission waste; sanitation co-treatment and re-usable technologies; poorly structured market for low-emission waste due to ineffective regulation and policy.

In international climate finance arena, Pakistan is new entrant having limited exposure of receiving and distributing these resources with a nascent institutional setup. Pakistan has very limited fiscal space to make major intervention to follow its climate agenda. Public sector interventions require for regulatory reforms and creation of incentives for private sector to catalyze investment to initiate projects in public as well as private sector. Pakistan has obtained some support under institutional arrangement but this is still a meager amount in view of extent of threat to climate change. The replication of international best practices with suitable modification as per our specific requirement is also required.

Carbon pricing strategy should be immune to political shifts, a shared vision is essential for a carbon pricing mechanism to sustain and flourish. Co-ordination and co-operation between different actors involved in policy design & implementation are the keys for the success of a carbon strategy. This would require regular communication between federal & provincial governments, reliable Measurement, Reporting & Verification (MRV) system, transparent consultation processes, a clear roadmap and guidelines for identified sectors. Think-tanks, universities and experts must be taken on board. Two-way communication is essential along-with building strong inter-governmental channels. Carbon market readiness should be achieved through capacity building both at national and local levels, by engaging experts and making an effective communication strategy.

Mobilizing capital from international players in developed world including multilateral, bilateral DFIs and other institutions like Private Infrastructure Development Group (PIDG) will be a key lever to fill this funding gap. Pakistan should make a strategy to establish institutional framework to show readiness to the developed world to address the climate crisis. Capacity building of all stakeholders including public and private sectors to seek international finance, its proper expenditure and monitoring needs to be developed.

Pakistan has made very liberal commitments for reduction in GHG in the region especially as compared to India despite having very limited resources. In this regard, NDCs should be reviewed annually instead of five years helping Pakistan to make necessary mid-course corrections according to situation especially in this post-floods scenario. Certainly, the commitment of developed world will only be materialized if Pakistan shows its readiness in mitigation and adaptation measures. But global response in form of financial commitments & its executions to Pakistan under current catastrophic situation should also be taken into consideration before setting any sort of target for the country in near future

(Concluded)

Hammad Mehmood is a doctoral candidate at the University of Peshawar. Saud Bin Ahsen works at a public policy
think tank.