Pakistan Carbon Markets Policy

Pakistan’s first ever Policy Guidelines for Trading in Carbon Markets has been launched after due approval from the Federal Cabinet on 27th December, 2024. The policy will revolutionize the very spirit of trading carbon with transparency and integrity and in the long run will meet the goals of mitigation. Steps underway for operationalization of carbon markets are as under:

1. Establishment of Carbon Market Working Group
2. Rules and Regulations for both Voluntary and Compliance Carbon Markets
3. Carbon Market Registry customization and roll-out
4. Development of Carbon Market Investment projects
5. Capacity building, awareness and outreach strategy

Article 6 of Paris Agreement and Pakistan

1. Bilateral Cooperation (6.2): Countries can trade Internationally Transferred Mitigation Outcomes (ITMOs).
2. Promotes cross-border carbon credit transactions to meet Nationally Determined Contributions (NDCs).
3. Establishes a global carbon market mechanism for public and private sectors. Overseen by a UN-supervised framework, similar to the Clean Development Mechanism (CDM).(6.4)
4. Focuses on non-market approaches like technology transfer and capacity building.(6.8)

Outcomes of Bilateral Negotiations during COP29

Pakistan will capitalize its carbon markets in collaboration with international financial entities and countries. Countries like Sweden, Norway, Denmark, South Korea and Singapore have shown their keen interest to invest in the carbon markets of Pakistan. MoCC&EC is constantly engaged with the countries and financial entities to bring climate finance in the country in order to meet the climate goals as committed internationally.

Coordination with Development Partners

Climate Finance Wing plays a critical role in coordinating with international development partners to mobilize financial resources for climate-related projects. The wing is actively engaged with various Development Partners including ADB, WB, GIZ, FCDO, KOICA, JICA, AIIB, UNDP and UNIDO etc. to secure climate finance for both mitigation and adaptation initiatives. Through concerted efforts, the Wing ensures that Pakistan receives the necessary funding to address the impacts of climate change and pursue a sustainable, low-carbon development pathway as well as fill the financial gaps.

National Climate Finance Strategy (NCFS)

Pakistan’s vulnerability to climate change necessitates a robust financial strategy to support adaptation and mitigation efforts. The National Climate Finance Strategy (NCFS) provides a comprehensive framework for mobilizing and deploying climate finance, aligning with national priorities and international commitments. The strategy recognizes the escalating costs of climate change and the even higher price of inaction, emphasizing the need for a coordinated approach to create fiscal space for climate-resilient and low-carbon development. The Strategy aims to identify key climate investment sectors including renewable energy, agriculture, water management, disaster resilience, sustainable urban development, solid waste management and to implement and leverage key climate finance sources including public, private, local and global climate finance. It also sets annual climate finance targets which need to be implemented vigorously.

Green Climate Fund

The GCF, established under UNFCCC, is the world’s largest climate fund. Pakistan has a current funding of 304.2 Million USD in ten different approved projects to help in achieving its NDC targets. Since GCF operates through accredited entities, Pakistan is currently seeking to expand the number of its accredited entities with the GCF Secretariat from two i.e JS Bank & NRSP to ten which will lead to a high volume of GCF funding per year.

The further detail on the ongoing approved projects in Pakistan can be found here .

Global Environment Facility (GEF)

Through the availability of GEF funds, Pakistan is striving to meet the objectives of international environmental agreements. Pakistan has mobilized $ 41.1 Million USD from this facility till date.

The further detail on the ongoing approved and past projects in Pakistan can be found here .

Adaptation Fund (AF)

The Adaptation Fund, established in 2001, was initially financed with the share of proceeds of two percent of certified emission reductions (CERs) issued from activities under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The Fund has financed $16 Million USD to Pakistan’s adaptation projects against adverse effects of climate change.

The further details on the projects of AF in Pakistan can be found here .

Global Shield Against Climate Risks

Pakistan has submitted the Request for Support document to the Global Shield Secretariat for financial support against climate risks. To develop country support package, the in-country process was carried out by UNDP and the Stocktake and Gap Analysis Report was launched by MoCC&EC in collaboration with UNDP on October 24, 2024 in Islamabad. Furthermore, proposals were requested from different government and private entities to gauge the interventions required for Pakistan’s country support package. The following areas of interventions will be covered:

1. Sovereign Finance
2. Livelihood Protection
3. Agricultural Finance
4. Public Assets
5. Risk Analytics

Climate Budget Tagging

A framework that tracks and reports government expenditures related to climate change adaptation and mitigation. It aims to integrate climate change considerations into fiscal policy and public finance management, ensuring that sufficient financial resources are allocated toward addressing climate-related challenges. With continued development, it can play an important role in helping Pakistan adapt to and mitigate the impacts of climate change while promoting sustainable development.

Green Taxonomy

MoCC&EC is co-partnering with the State Bank of Pakistan for framing the National Green Taxonomy of Pakistan for sectoral adaptation and mitigation goals, to achieve environmentally sustainable economic activity. The framework will guide investments in sustainable activities and support in developing environmentally friendly regulations.

Loss and Damage Fund

Pakistan Country Framework for Green Growth Initiatives (GGGI)

Pakistan Country Framework for Green Growth Initiatives (GGGI) is a strategic approach aimed at fostering sustainable development in Pakistan by integrating environmental sustainability with economic growth and addressing the country’s growing environmental challenges. The framework aligns with Pakistan’s commitment to climate change mitigation and adaptation. This initiative encourages the adoption of green technologies, sustainable practices, and climate-resilient development across multiple sectors.

Debt for Climate Swap

Being a debt stressed country, Pakistan has the potential to enter into an agreement with a lending country for social uplift through sustainable and green projects by investing the debt amount in climate action. This mechanism will allow Pakistan to swap its debt for a commitment to invest in its socio-ecological transformation, benefitting Pakistan and the global community.

NCQG and Pakistan

Pakistan has played a proactive role in negotiations on the New Collective Quantified Goal (NCQG) The NCQG is a goal to triple climate finance for developing countries from $100 billion annually to $300 billion annually by 2035. The goal was adopted at the UN Climate Change Conference COP29 in Baku, Azerbaijan on November 24, 2024. The NCQG aims to balance adaptation and mitigation, while taking into account the needs of developing countries.

Focal Point:

Mr. Zulfiqar Younas

Operational Focal Point since 2024-04-08
Political Focal Point since 2024-04-08
Additional Secretary (Climate finance)
Ministry of Climate Change & Environmental Coordination
2nd floor, LG & RD Complex, G5-2
Islamabad, ICT – 44000
Pakistan
Tel: +051 924554
zyounas@gmail.com
geffocalpoint@gmail.com