Pakistan has the potential to generate 40 to 75 million tons of tradable carbon credits annually, with an estimated value ranging from $400 million to $2.25 billion, according to a report released by Transparency International Pakistan (TI Pakistan) on Tuesday.
The report, titled ‘Carbon Markets Readiness in Pakistan: Addressing Governance Gaps and Safeguarding Against Integrity Risks’, highlights the significant environmental and economic opportunities available through carbon markets. TI Pakistan estimates that addressing 10-15% of the country’s annual greenhouse gas emissions via carbon projects could unlock a substantial revenue stream.
Despite this potential, the report points out that there is a notable gap between the country’s climate change mitigation ambitions and the capacity to implement sophisticated carbon market mechanisms. Key challenges include the absence of a consolidated national emissions baseline and the complexity of carbon market processes, which require advanced technical capabilities in areas like emissions accounting, monitoring, and legal frameworks for carbon ownership.
The report also emphasizes the need for improved governance, transparency, and institutional capacity to ensure the effective functioning of carbon markets. It suggests the establishment of a dedicated carbon markets team at the Federal Ministry of Climate Change & Environmental Coordination, as well as the creation of a National Carbon Coordination Council (NCCC) for centralised oversight.
Furthermore, the report underscores the importance of transparency, with Executive Director of TI Pakistan, Kashif Ali, highlighting the critical role of clear reporting standards and robust community participation in ensuring trust in the carbon market.
The report also identifies Pakistan’s mangrove carbon market as a promising sector, with the potential to generate between $20 million and $50 million annually. TI Pakistan has outlined several recommendations to address governance gaps, including the establishment of a comprehensive carbon market law, the development of data infrastructure, and capacity-building programs at various levels of government.
TI Pakistan’s Chairman, Justice (retd) Zia Perwez, expressed hope that the report’s recommendations will help guide the government and stakeholders in unlocking the full potential of Pakistan’s carbon markets as a tool for climate finance.