Experts underscore leading role of carbon markets in KP to mobilize green financing in Pakistan

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ISLAMABAD, Jun 20 (DNA):Carbon markets will play a leading role in driving Pakistan’s climate action, however, addressing regulatory challenges, building capacity, and stakeholder consensus would be the key. 

This was one of the key message from the consultative workshop on “Unlocking the potential of carbon markets in Khyber Pakhtunkhwa: Opportunities and regulatory need assessment” that was conducted in Khyber Pakhtunkhwa Planning and Development Department under a joint project of Sustainable Development Policy Institute (SDPI) and Embassy of Denmark in Pakistan, a news release said.

Imtiaz Hussain Shah, Additional Chief Secretary Planning and Development Department mentioned that Khyber Pakhtunkhwa is actively seeking opportunities within carbon markets to support our development objectives while mitigating greenhouse gas emissions. “Our commitment to sustainable development remains steadfast, recognizing the pivotal role that carbon markets can play in achieving this vision,” he said.

He further highlighted that through concerted efforts, we are dedicated to creating an enabling environment for carbon market development, ensuring a sustainable future for generations to come. By harnessing the potential of carbon markets, we aim to drive economic growth, reduce poverty, and build a more resilient Khyber Pakhtunkhwa”.

Jakob Linulf, Ambassador of Denmark to Pakistan mentioned that climate change is the mother of all crises. It is worsening the world, and if we don’t take action, the coming generations will face severe crises.

He stressed the significant role that is to be played by the federal and provincial government departments. While highlighting the role of Khyber Pakhtunkhwa government, he appreciated the government efforts around climate action and mentioned that it further needs to create awareness on how to make the best use of its natural resources. Pakistan needs to transform its economy, and carbon trading could be a source of project financing.

Dr. Vaqar Ahmed, Joint Executive Director at SDPI while highlighting the significance of carbon markets in Pakistan mentioned that the country needs “foreign exchange”, and carbon markets is one of the low hanging fruits through which it can implement and bring the foreign currency into Pakistan.

He further mentioned that with introduction of global initiatives, such as “European Union’s Carbon Border Adjustment Mechanism (CBAM)”, Pakistan is going to face an increasing pressure of reducing the carbon footprint of its exports.
Especially given that over 44% of Pakistan’s exports are going to Europe, the country has limited time to make necessary adjustments before CBAM will be applied. Carbon markets in Pakistan would not only help in achieving the NDCs that we have set for ourselves, but that would also generalize the financing for low carbon technologies in Pakistan.

Mrs. Sarah Rehman, Chief International Development Section at P&DD mentioned that in Pakistan, the reality of climate change is not just a topic of discussion; it’s a stark reality evident in recent floods, health concerns, food insecurity, and impacts on tourism.

She said to address these pressing issues, we have established a dedicated Climate Cell within the Planning and Development Department. This specialized unit collaborates closely with stakeholders to confront the challenges posed by climate change. Moreover, we’re diligently evaluating every project in our database through the lens of climate change. This comprehensive approach ensures that each initiative contributes to a sustainable future for Khyber Pakhtunkhwa.

Engr. Ubaid ur Rehman Zia, Head of Energy Unit at SDPI highlighted various challenges that currently exist for an efficient carbon markets in Pakistan. The key challenges include i) limited capacity of both public and private sector entities, ii) limited data availability for a carbon registry, knowledge gaps around global standards, and iii) the market complexities.

As the way forward, Ubaid highlighted that climate action needs to be incorporated in every decision-making process of the government and its entities. In this regard, creation of Pakistan climate change authority is a step in the right direction.

He further mentioned various aspects of SDPI and Embassy of Denmark’s joint project on carbon markets under which they are conducting capacity building workshops across Pakistan along with addressing the knowledge gaps.

Dr. Khalid Waleed, Research Fellow at SDPI during his presentation on carbon markets mentioned that Pakistan’s economy is already vulnerable to climate change, it needs to couple its economic growth with environmental sustainability.
For corporates, industries, and other project developers, this would require providing an alternate engine of economic growth that ensures environmental sustainability while further enabling them to climb up the corporate ladder. This is where carbon markets would play an essential role.

He also conducted a discussion around the global trend in carbon markets.

Zainab Naeem, Associate Research Fellow at SDPI mentioned that carbon pricing has not been explicitly mentioned in the existing policy documents in Pakistan. To ensure inclusive pricing policy, there is a need to focus on a hybrid mechanism that can benefit all stakeholders.