ISLAMABAD: Pakistan’s first-ever National Carbon Market Policy, launched in November 2024, signals a significant commitment to reducing emissions. However, industry experts warn that the policy falls short in ambition, sector-specific focus, and global integration, which could hinder the country’s ability to secure climate finance and investment.
Dr. Ayyaz Uddin, Regional Chairman of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), highlighted that the policy is an important step toward incorporating carbon trading into Pakistan’s broader climate strategy. However, he emphasized the need for improvements, including the encouragement of investments in carbon capture, storage, and renewable energy through public-private partnerships. He also proposed a more flexible Carbon Adjustment Factor to foster the participation of startups and SMEs.
Uddin called for nationwide awareness campaigns and capacity-building programs to engage communities and the private sector while advocating for decentralized governance and stronger regional collaboration. He also urged the government to enable cross-border carbon trading. With Pakistan’s pledge to cut greenhouse gas emissions by 50% by 2030—15% unconditionally and 35% dependent on international support—Uddin stressed that more aggressive action was necessary.
By comparison, India aims for a 45% reduction in emissions intensity by 2030, while China seeks to peak emissions by 2030 and achieve carbon neutrality by 2060. Bangladesh has committed to reducing GHG emissions by 5% unconditionally and 10% with international support by 2030, with a strong emphasis on renewable energy.
Uddin noted that Pakistan’s carbon market policy lacks sector-specific coverage, especially in industries with high emissions like cement, steel, and transportation, which are prioritized by regional counterparts such as India and China. Furthermore, Pakistan is trailing in advanced technologies like carbon capture and green hydrogen production.
Currently, Pakistan is developing a voluntary carbon market, operating without a formal compliance framework. In contrast, India’s carbon market is more mature, with the well-established Perform, Achieve, and Trade (PAT) Scheme since 2012, and plans for a broader carbon trading mechanism. Ghana’s emerging market, meanwhile, focuses on REDD+ projects addressing emissions from deforestation and forest degradation.
Ayyaz Uddin pointed out that Pakistan’s carbon market currently focuses on agriculture and a developing energy sector. This contrasts with India’s focus on heavy industries like cement and steel, Ghana’s emphasis on forestry alongside renewable energy and transport, and Bangladesh’s dedication to renewable energy and agriculture.
To strengthen its carbon market policy, attract international investment, and play a leading role in global climate action, Pakistan must address these gaps and implement bold reforms. While the 2024 policy was a positive step, Ayyaz Uddin concluded that enhanced integration with international markets and sector-wide inclusivity is key to achieving climate goals.
